A reduction in the demand for an input can arise because the demand for the output produced by this input falls or the factor itself becomes less productive.

    Suppose the graph to the right shows the market for cigarette factory workers. If, due to adverse publicity about smoking and the tobacco industry, demand for cigarettes falls the market price of cigarettes will fall. This, in turn will reduce the MRP of cigarette factory workers causing demand to shift from D1 to D3, wages to fall from W* to W3, and numbers hired to drop from N* to N3.

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