The labor demand curve of a firm:
A) will shift to the left if the price of the product the labor is producing falls.
B) is perfectly elastic if the firm is selling its product in a purely competitive market.
C) reflects a direct relationship between the number of workers hired and the money wage rate.
D) is the same as its marginal product curve.

Question

Quizplus · Accepted Answer

According to the law of demand, if the price of a product falls, the quantity demanded for that product increases. In the case of labor, if the price of the product the labor is producing falls, the demand for labor decreases because the firm is producing less and requires fewer workers. Therefore, the labor demand curve of a firm will shift to the left if the price of the product the labor is producing falls.

The Labor Demand Curve of a Firm