Because of diminishing marginal productivity
A)the labor supply curve is not vertical.
B)nominal wages are sticky in a downward direction.
C)the labor demand curve is negatively sloped.
D)households save only a small share of their income.

Question

Quizplus · Accepted Answer

Diminishing marginal productivity implies that each additional unit of labor added to the production process will result in a smaller increase in output. As a result, employers will be willing to hire fewer workers at higher wage rates, leading to a negatively sloped labor demand curve.

Because of Diminishing Marginal Productivity