(Scenario: The Decision to Hire Labor)Use Scenario: The Decision to Hire Labor.Holding everything else constant,if the demand for this firm's product decreases: Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labor is given in the table that follows.
A)its value of marginal product curve shifts to the right,and it will hire more workers.
B)its value of marginal product curve shifts to the left,and it will hire more workers.
C)its value of marginal product curve shifts to the left,and it will hire fewer workers.
D)the firm will not change its hiring,since it is a perfectly competitive firm.

Question

(Scenario: The Decision to Hire Labor)Use Scenario: The Decision to Hire Labor.Holding everything else constant,if the demand for this firm's product decreases: Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labor is given in the table that follows. 
A)its value of marginal product curve shifts to the right,and it will hire more workers. 
B)its value of marginal product curve shifts to the left,and it will hire more workers. 
C)its value of marginal product curve shifts to the left,and it will hire fewer workers. 
D)the firm will not change its hiring,since it is a perfectly competitive firm.

Quizplus · Accepted Answer

When the demand for the firm's product decreases, the firm's value of marginal product (VMP) curve shifts to the left. This means that the firm's marginal product of labor (MPL) decreases and the firm is willing to pay less for each additional worker. As a result, the firm will hire fewer workers to produce the same level of output. Therefore, the correct answer is C.

(Scenario: the Decision to Hire Labor)Use Scenario: the Decision to Hire