The Demand Curve for Labor of a Monopolist

question 232

Multiple Choice

The demand curve for labor of a monopolist

• A) is horizontal even though the demand curve for labor for a competitive firm is downward sloping.
• B) slopes down for the same reason as the demand curve for labor of a perfectly competitive firm.
• C) slopes down because of the law of diminishing marginal product and because the monopolist must lower prices to sell additional units of the good.
• D) slopes upward because monopolists use more capital than do perfectly competitive firms.

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Definitions:

Contestable Markets

Markets where the entry and exit of firms are so easy that the market always remains competitive, ensuring that prices remain close to marginal costs.

Barriers To Entry

obstacles that make it difficult for new competitors to enter a market, including high startup costs, access to technology, and stringent regulations.

Competitive

Characterizes a market scenario where multiple sellers strive to attract customers by offering better terms, prices, or products.