How Wages Are Determined in Competitive Labor Markets * Figure 48.1 Wages and Labor $5.50 5.00 4.50 S 4.00 3.50 WAGE RATES 3.00 2.50 2.00 1.50 D 1.00 .50 0 100 200 300 400 500 600 700 800 900 1,000 QUANTITY OF LABOR Use Figure 48.1, which shows the supply and demand curves for a perfectly competitive labor market in a perfectly competitive product market, to answer these questions: 1. What two factors affect the demand for labor? 2. How does marginal revenue product affect the demand for labor? 3. Why is the demand curve for labor downward sloping