Factor Markets
Question 1 of 30
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In a competitive labour market, demand for labour is derived. Which statement best explains why the demand curve for labour slopes downward?
Select one option.
A
As wages fall, workers become less willing to work, so firms hire fewer workers.
B
As wages rise, labour productivity always rises, so firms hire more labour.
C
As wages rise, trade unions force firms to increase employment.
D
As wages fall, firms reduce output because labour becomes cheaper.
E
As wages rise, the marginal cost of hiring labour rises, so firms reduce labour hired because the marginal revenue product falls relative to wage.
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