Diminishing returns results in a labor demand curve that:
A) slopes upward.
B) slopes downward.
C) shifts to the left.
D) shifts to the right.

Question

Quizplus · Accepted Answer

The law of diminishing returns implies that as more units of labor are added to a fixed amount of capital, the additional output produced by the extra labor decreases. This leads to a downward-sloping labor demand curve because employers will pay less for each additional unit of labor as the productivity of labor decreases.

Diminishing Returns Results in a Labor Demand Curve That