The demand for labor is _____ in monopolistic competitive, oligopoly, and monopoly markets.
A) downward-sloping
B) upward-sloping
C) horizontal
D) vertical

Question

Quizplus · Accepted Answer

The demand for labor in monopolistic competitive, oligopoly, and monopoly markets is downward-sloping because, in these market structures, firms face a downward-sloping demand curve for their products, which translates into a downward-sloping demand curve for labor. This reflects the law of diminishing marginal returns and the fact that as more labor is hired, the additional output produced by the additional labor decreases, leading to a decrease in the willingness to pay for additional labor.

The Demand for Labor Is _____ in Monopolistic Competitive, Oligopoly