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.

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Definitions:

Geometric Average

The geometric average is a method of calculating the mean that mitigates the impact of extreme values in a data set, commonly used in calculating investment returns.

Historical Record

Documentation or an account of past events, actions, or operations, serving as evidence or information about previous occurrences.

Financial Markets

Platforms where buyers and sellers trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.

Real Rate Of Return

The annual percentage of profit or loss on an investment adjusted for inflation.