Overview
Derived demand for labor is a fundamental concept in economics that explains how the need for workers is linked to the demand for goods and services. When consumers want more products, businesses require more labor to meet that demand, leading to increased hiring. Understanding this relationship hel...
Key Terms
Example: In a booming economy, labor demand increases as companies need more workers.
Example: If the demand for cars increases, the derived demand for automotive workers also increases.
Example: In a labor market, equilibrium occurs when the number of job seekers equals the number of job openings.
Example: Minimum wage laws set the lowest legal wage that can be paid to workers.
Example: Higher productivity means more goods are produced per hour of labor.
Example: High unemployment rates can indicate a lack of derived demand for labor.