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

question 185

Multiple Choice

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

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

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Definitions:

Cost Flow Assumptions

Refers to the methods used to determine the cost of inventory sold and remaining inventory value, including FIFO, LIFO, and weighted average.

FIFO

An inventory valuation method where goods first received are the first ones sold, used in accounting to determine cost of goods sold.

LIFO

LIFO, standing for Last-In, First-Out, is an accounting method used for inventory valuation where the most recently produced or acquired items are the first to be expensed.

Purchase Order

A document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.