The demand for labor is derived from the demand for final goods which that labor is used to produce.

Question

Quizplus · Accepted Answer

The demand for labor is ultimately derived from the demand for the goods and services that the labor is used to produce. If there is a high demand for a certain final good, then there will likely be an increased demand for the labor needed to produce that good. Conversely, if there is a low demand for a particular good, then the demand for the labor used to produce that good will decrease as well. Therefore, the demand for labor is ultimately dependent on the demand for the final goods being produced.

The Demand for Labor Is Derived from the Demand for Final