When is the derived demand for labor more inelastic?
A) If a given type of labor is essential in the production of the final products
B) If the market demand for the final products is elastic
C) If the cost of labor is a significant part of the total product cost
D) If the supply of materials is elastic

Question

Quizplus · Accepted Answer

When a certain type of labor is essential in the production of the final product, the derived demand for labor becomes more inelastic. This is because the firm cannot produce the final product without the necessary labor, regardless of any changes in the market demand or price of the final product.

When Is the Derived Demand for Labor More Inelastic