Which of the following statements is FALSE? A) The demand for labor is a derived

Question

Which of the following statements is FALSE?

A) The demand for labor is a derived demand.

B) If the marginal revenue product is greater than the wage, a firm should hire more workers.

C) If the marginal product of a lab technician is 10 lab tests, and the price per lab test is $50, the lab technician's marginal revenue product is $500.

D) The labor demand curve, which equals price times average product, is downward sloping.

A) The demand for labor is a derived demand.

B) If the marginal revenue product is greater than the wage, a firm should hire more workers.

C) If the marginal product of a lab technician is 10 lab tests, and the price per lab test is $50, the lab technician's marginal revenue product is $500.

D) The labor demand curve, which equals price times average product, is downward sloping.

Explanation / Answer

Answer
Option D
The labor demand curve is the same as the marginal revenue for a firm and it is not the price times average product.
The labor demand is a derived demand because the derived demand is the demand for the inputs as the demand for the product increases the labor demand increases.
the optimum hiring is at MRP=wage so if the MRP>wage then the firm should increase workers
MRP=MPL*price
=50*10=$500
as given

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