A Reason Why a Perfectly Competitive Firm's Demand for Labor

question 70

Multiple Choice

A reason why a perfectly competitive firm's demand for labor curve slopes downward is that

• A)each additional unit of labor hired is less efficient than previously hired units.
• B)in the short run, as more labor is hired, labor's marginal product falls because of the law of diminishing returns.
• C)the extra cost of hiring additional units of labor increases as a firm hires more units of labor.
• D)the firm's demand curve for the product that uses labor is downward sloping.

---

Definitions:

Real Earnings

Earnings adjusted for inflation, depicting the real purchasing power of income.

Automated Production

involves the use of control systems and machinery to handle tasks in manufacturing with minimal human intervention.

Per-Unit Costs

The cost incurred to produce, manufacture, or acquire a single unit of a product or service.

Decrease

A reduction in size, quantity, or importance of something.