The market demand curve for labor slopes downward because:

Question

Quizplus · Accepted Answer

The law of diminishing marginal product states that holding all other inputs constant, as one input (in this case labor) is increased, the marginal product (or output) of that input will eventually decrease. As a result, firms are willing to hire less labor at higher wages and more labor at lower wages, causing the market demand curve for labor to slope downward. Option A is incorrect because the supply of labor is not infinite, it is limited by factors such as the size of the population and individuals' willingness and ability to work. Options B, D, and E are incorrect because they do not directly explain why the market demand curve for labor slopes downward.

The Market Demand Curve for Labor Slopes Downward Because