The labor demand curve of a purely competitive seller
A) slopes downward because the elasticity of demand is always less than unity.
B) slopes downward because of diminishing marginal productivity.
C) is perfectly elastic at the going wage rate.
D) slopes downward because of diminishing marginal utility.

Question

Quizplus · Accepted Answer

The labor demand curve slopes downward due to diminishing marginal productivity, meaning that as more labor is hired, the additional output produced by each additional worker decreases, leading to a lower willingness to pay for additional labor.

The Labor Demand Curve of a Purely Competitive Seller