The labor demand curve of a purely competitive seller
A)slopes downward because the elasticity of demand is always less than unity.
B)slopes downward because of diminishing marginal productivity.
C)is perfectly elastic at the going wage rate.
D)slopes downward because of diminishing marginal utility.

Question

Quizplus · Accepted Answer

The labor demand curve for a purely competitive seller slopes downward primarily due to the law of diminishing marginal productivity. This principle states that as more units of a variable input (like labor) are added to fixed amounts of other inputs, the additional output produced by each new unit of input eventually decreases.

The Labor Demand Curve of a Purely Competitive Seller