The firm's value of marginal product curve slopes downward:
A) only if the firm is a perfect competitor in the product market.
B) because of diminishing returns.
C) only if the firm is a perfect competitor in the labour market.
D) only if the firm is a perfect competitor in both the labour and product markets.

Question

Quizplus · Accepted Answer

The firm's value of marginal product curve slopes downward due to the law of diminishing marginal returns. As the firm hires more workers, while holding all other inputs constant, the marginal product of labor decreases, leading to a downward slope in the curve. The other options are incorrect because the slope of the curve is not directly related to the level of competition in either the product or labor markets.

The Firm's Value of Marginal Product Curve Slopes Downward