Question

Understand why a firm's marginal revenue product curve is its labor demand curve.

Short answer

• Because this firm employs the same number of people, the value of the marginal cost curve curve is also the firm's workforce demand curve, with which the marginal value equals the same wage.
• The pay rate determines the slope of the labor supply curve.

Step-by-step solution

Introduction.

• A graph that demonstrates the relationship between marginal revenue product and changing input quantity while keeping all other inputs constant.
• This curve depicts the incremental change in total revenue as a result of variable input adjustments.

 labor demand curve.

• The pay rate determines the slope of the labor demand curve.
• The horizontal sum of all labor demands made by all enterprises constitutes the labor market demand.
• The slope of the labor supply curve is determined by the pay rate.

The labour quantity demanded validates a firm's actual sales merchandise slope.

• Because the firm chooses the amount of labor where the modest value of the item equals the rate of pay, the value-of-marginal-product curve represents the firm's labor demand curve.