Given the law of diminishing marginal returns,the marginal value product of labor curve for a competitive firm _____,when other inputs are fixed.
A)will be upward-sloping
B)coincides with the firm's average revenue curve
C)is horizontal at the price level
D)is the same as the firm's demand curve for labor

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns implies that as a firm hires more labor (while keeping other inputs fixed), the additional output produced by each additional worker decreases. This means the additional revenue the firm makes from hiring an extra worker (marginal value product of labor) decreases as well. Therefore, the firm's demand for labor, which is based on the marginal value product of labor, will decrease as it hires more workers, making the marginal value product of labor curve also the firm's demand curve for labor.

Given the Law of Diminishing Marginal Returns,the Marginal Value Product