The labor demand curve of a firm that sells its product in an imperfectly competitive market
A)is downsloping, solely because of the law of diminishing returns.
B)is downsloping and flatter than the labor demand curve of a firm that sells its product in a purely competitive market.
C)is upsloping.
D)is downsloping because of both declining marginal productivity and declining product prices as quantity increases.

Question

Quizplus · Accepted Answer

In an imperfectly competitive market, the labor demand curve is downsloping due to both the law of diminishing returns (declining marginal productivity) and the fact that firms must lower prices to sell additional units, leading to declining product prices as quantity increases.

The Labor Demand Curve of a Firm That Sells Its