A firm's demand curve for labour in a perfectly competitive market is the downward-sloping portion of its _____ curve.
A) marginal revenue
B) average total cost
C) value of the marginal product of labour
D) total revenue

Question

Quizplus · Accepted Answer

The value of the marginal product of labour curve shows the additional revenue generated by each additional unit of labour. The firm will hire workers up to the point where the value of the marginal product of labour equals the wage rate. This is the point where the firm's demand curve for labour intersects with the supply curve of labour. Therefore, the downward-sloping portion of the value of the marginal product of labour curve represents the firm's demand curve for labour.

A Firm's Demand Curve for Labour in a Perfectly Competitive