When economists say that the demand for labor is a derived demand, they mean that it is
A)dependent on government expenditures for public goods and services.
B)related to the demand for the product or service labor is producing.
C)based on the desire of businesses to exploit labor by paying below equilibrium wage rates.
D)based on the assumption that workers are trying to maximize their money incomes.

Question

Quizplus · Accepted Answer

The demand for labor is considered a derived demand because it is directly related to the demand for the products or services that the labor is used to produce. If there is high demand for a product, businesses will need more labor to increase production, hence increasing the demand for labor.

When Economists Say That the Demand for Labor Is a Derived