A firm's demand curve for an input in a perfectly competitive market is the downward-sloping portion of its:
A)marginal revenue curve.
B)average total cost curve.
C)VMPL curve.
D)total revenue curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms hire inputs until the VMPL (value of the marginal product) equals the input price. The demand curve for an input is the portion of the VMPL curve that is downward sloping, as the firm will demand less units of the input as the price of the input rises. This is because the VMPL decreases as more units of the input are added, leading to diminishing marginal returns. Therefore, the correct answer is C.

A Firm's Demand Curve for an Input in a Perfectly