A firm's demand curve for labor
A) is its marginal product curve.
B) will shift to the left if the price of the product the labor is producing should fall.
C) is perfectly elastic if the firm is selling its product in a purely competitive market.
D) reflects a direct (positive) relationship between the number of workers hired and the money wage rate.

Question

Quizplus · Accepted Answer

A firm's demand for labor is derived from the demand for the product that labor produces. If the price of the product falls, the revenue generated from selling the product decreases, which in turn reduces the demand for labor. This shift will result in a decrease in the quantity of labor demanded at any given wage rate.

A Firm's Demand Curve for Labor