The derived demand and, consequently, the demand curve for labor are determined by
A) labor's wage.
B) labor's marginal revenue.
C) the marginal cost of the input labor.
D) labor's marginal revenue product.

Question

Quizplus · Accepted Answer

The derived demand for labor and the demand curve for labor are determined by the marginal revenue product of labor. This is because firms will hire additional units of labor as long as the marginal revenue product of labor is greater than or equal to the wage rate. Therefore, the demand for labor is derived from the marginal revenue product of labor.

The Derived Demand And, Consequently, the Demand Curve for Labor