Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It increases the demand for labor to produce more of the product.
B
It decreases the demand for labor due to automation.
C
It has no effect on labor demand since labor is fixed.
D
It shifts demand away from labor towards capital goods.
Understanding the Answer
Let's break down why this is correct
Answer
When consumer demand for a product increases, companies need to produce more of that product to meet the needs of their customers. This means they will require more workers to help with the extra production. As a result, the demand for labor in that industry goes up because businesses want to hire more people to keep up with the higher demand. For example, if a bakery sees more customers wanting bread, it will need to hire additional bakers and staff to make and sell the bread. Therefore, the increase in consumer demand leads directly to a higher demand for labor to support that production.
Detailed Explanation
When more people want a product, companies need to make more of it. Other options are incorrect because Some might think that machines will replace workers; This answer suggests that the number of workers can't change.
Key Concepts
Derived Demand for Labor
Consumer Demand
Labor Market Dynamics
Topic
Derived Demand for Labor
Difficulty
easy level question
Cognitive Level
understand
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