Why is the short-run demand curve for labor downward sloping?
What will be an ideal response?
The firm will pay another unit of labor as much as the amount that the firm benefits from having another unit of labor. In a competitive market this amount is equal to P ? MP. As more labor is hired, MP declines. Thus, since the value of the marginal unit of labor declines as more labor is hired, the demand curve is downward sloping.
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The above figure shows the market for bicycles. When there is a physical fitness craze so that everyone wants to exercise the
A) demand curve for bicycles shifts from D1 to D2. B) demand curve for bicycles shifts from D2 to D1. C) demand curve and the supply curve of bicycles do not shift. D) supply curve of bicycles shifts from S1 to S2.
During 1982-1997, stock prices increased substantially. Which of the following helped to boost stock prices during this period?
a. higher interest rates and rapid growth of corporate profits b. lower interest rates and rapid growth of corporate profits c. higher interest rates and slow growth of corporate profits d. lower interest rates and slow growth of corporate profits