The demand for labor curve slopes downward because
A) it takes more workers to produce more output.
B) the value of marginal product of labor diminishes as the quantity of labor employed increases.
C) at lower wages, people are not willing to work as many hours.
D) wages are fixed.
E) the supply of labor curve is upward sloping.

Question

Quizplus · Accepted Answer

The value of marginal product of labor diminishes as the quantity of labor employed increases, leading to a downward slope of the demand for labor curve. As more labor is added to the production process, the additional output produced by each additional unit of labor decreases, leading to a decline in the marginal product of labor. As a result, firms are willing to hire fewer workers at higher wages and more workers at lower wages, leading to the downward slope of the demand for labor curve.

The Demand for Labor Curve Slopes Downward Because