Labor economists sometimes refer to labor demand as "derived" demand. In this context, where does "derived" come from?
A)The firm's production function.
B)The union's willingness to accept a lower wage.
C)Consumer demand for the firm's product.
D)The firm's profit.
E)The degree of competition in the firm's industry.

Question

Quizplus · Accepted Answer

Labor demand is referred to as derived demand because it is derived from the demand for the goods or services produced by the firm. The more consumers demand the firm's product or service, the more labor the firm will need to produce that product or service.

Labor Economists Sometimes Refer to Labor Demand as "Derived" Demand