The market demand curve for labor is based on the:

Question

Quizplus · Accepted Answer

The market demand curve for labor is based on the marginal product of labor, as this represents the additional output that can be produced by adding one more unit of labor to the production process. Firms will continue to hire workers as long as the marginal product of labor is greater than the wage rate, as hiring more workers will lead to an increase in profits. The elasticity of demand for labor and the elasticity of supply of labor may have an impact on the shape and steepness of the market demand curve for labor, but they are not the determining factors in its formation. Hiring preferences of firms may also influence the demand for labor, but they are not the primary factor.

The Market Demand Curve for Labor Is Based on The