Why is the demand for labor referred to as a "derived" demand?
A) It stems from the drive to minimize production costs to achieve economic efficiency.
B) It is based on the demand for the output labor produces.
C) It results from decreases in the supply of labor.
D) It arises from the shortages in labor markets.

Question

Quizplus · Accepted Answer

The demand for labor is derived from the demand for the output that labor produces. This is because firms hire workers to produce goods or provide services, and they will only hire as many workers as they need to meet their production requirements. As the demand for the output of a firm increases, so will its demand for labor.

Why Is the Demand for Labor Referred to as a "Derived