A Reason Why a Firm's Demand for Labour Curve Slopes

question 10

Multiple Choice

A reason why a firm's demand for labour curve slopes downward is that,holding everything else constant,

• A) the extra cost of hiring additional units of labour increases as a firm hires more units of labour.
• B) as more labour is hired, labour's marginal product falls due to diminishing marginal returns.
• C) the firm's demand curve for the product produced by the labour is downward sloping.
• D) each additional unit of labour hired is less efficient than previously hired units.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, indicating how much contributes to covering fixed costs and generating profit.

Pretax Income

The income earned by a business before any taxes have been deducted.

Target Pretax Income

The income a company aims to achieve before deducting taxes, often set for budgeting or goal-setting purposes.

Budgeted Income Statement

A financial report projecting revenue, expenses, and net income for a future period, based on management's expectations.