The determinants of labor demand include
A) Marginal physical productivity.
B) Labor expectations.
C) Labor shortages.
D) The leisure-labor trade-off.

Question

Quizplus · Accepted Answer

Marginal physical productivity measures the change in output resulting from a change in the input of labor, and is a key determinant of labor demand. As firms seek to maximize their profits, they will demand labor up to the point where the added revenue generated by an additional worker is equal to the cost of hiring that worker. Labor shortages and the leisure-labor trade-off are factors that may affect labor supply, but are not direct determinants of labor demand. Labor expectations may influence firms' hiring decisions, but are not a determinant of labor demand in themselves.

The Determinants of Labor Demand Include