Other things equal, we would expect the labor demand curve of a monopolistic seller to
A) decline more rapidly than that of a purely competitive seller.
B) decline less rapidly than that of a purely competitive seller.
C) decline at the same rate as that of a purely competitive seller.
D) be more elastic than that of a purely competitive seller.

Question

Quizplus · Accepted Answer

A monopolistic seller faces a downward-sloping demand curve for its product, meaning that it must lower the price to sell additional units. This results in a marginal revenue product (MRP) that declines more rapidly than in a purely competitive market, where the firm is a price taker and MRP equals the product price. Thus, the labor demand curve for a monopolistic seller declines more rapidly.

Other Things Equal, We Would Expect the Labor Demand Curve