The demand for labor is downward-sloping because of
A)Rising MPP.
B)Falling MC.
C)Diminishing returns to labor.
D)Rising P.

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more and more of a variable input (such as labor) is added to a fixed input (such as capital), the marginal product of that variable input will eventually decrease. This means that as an employer hires more and more workers, each additional worker will contribute less and less to overall output. Therefore, the employer will only be willing to hire additional workers at a lower wage rate - this is why the demand for labor is downward-sloping.

The Demand for Labor Is Downward-Sloping Because of