A firm's demand for labour
A) always increases when the prices of other factors fall.
B) decreases when the price of the firm's output falls.
C) decreases when the wage rate decreases.
D) increases when the price of the firm's output falls.

Question

Quizplus · Accepted Answer

The demand for labor by a firm decreases when the price of the firm's output falls because the firm earns less revenue from selling its products, making it less profitable to hire additional workers.

A Firm's Demand for Labour