The labor demand curve of a purely competitive seller
A) slopes downward because the firm must lower price to sell more output.
B) slopes downward because labor productivity increases as successive workers are hired.
C) is perfectly elastic because the firm is hiring an insignificant portion of the total labor supply.
D) slopes downward because the marginal product of successive workers declines.

Question

Quizplus · Accepted Answer

The labor demand curve of a purely competitive seller slopes downward because the marginal product of successive workers declines. As more and more workers are added, the marginal product of each additional worker decreases, causing the firm to be willing to pay lower wages for each successive worker.

The Labor Demand Curve of a Purely Competitive Seller