A firm's demand curve for labour slopes downwards because
A)of the law of diminishing marginal returns.
B)firms supply less labour as the wage rate rises.
C)workers supply less labour services as the wage rate falls.
D)of rising marginal product.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as more units of a variable input, such as labor, are added to a fixed input, such as capital, the marginal product of the variable input will eventually decrease. This means that each additional unit of labor added will produce less output than the previous unit, resulting in a diminishing marginal product. As a result, a firm is willing to pay less for each additional unit of labor hired as the marginal product decreases, resulting in a downward-sloping demand curve for labor.

A Firm's Demand Curve for Labour Slopes Downwards Because