Demand for labor that is derived from the process of profit maximization is called derived demand.

Question

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Derived demand refers to the demand for a factor of production, such as labor, that is derived from the demand for the final product or service it contributes to producing. In other words, firms hire labor in response to the demand for their products or services, with the goal of maximizing their profits.

Demand for Labor That Is Derived from the Process of Profit