Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
An increase in consumer demand for a specific product leads to the hiring of temporary workers to meet production needs.
B
A technological advancement allows for automation, reducing the need for labor in the long run.
C
A rise in wages across the industry leads firms to decrease their labor force permanently.
D
New legislation requiring better working conditions increases costs, leading to a permanent decrease in labor demand.
Understanding the Answer
Let's break down why this is correct
Answer
Derived demand for labor means that the demand for workers is based on the demand for the goods and services they produce. A scenario that illustrates a shift in labor demand in the short run might be a sudden increase in demand for ice cream during a hot summer. In this case, an ice cream shop may need to hire more workers quickly to keep up with the higher number of customers wanting ice cream. This increase in labor demand happens quickly and is directly tied to the temporary spike in ice cream sales, rather than a long-term change in the overall market or industry. Therefore, the shop's need for more employees is a short-run response to immediate demand, not a permanent change in how many workers are needed.
Detailed Explanation
When more people want to buy a product, companies need to make more of it quickly. Other options are incorrect because This option suggests that technology will reduce the need for workers over time; This option implies that higher wages will permanently reduce jobs.
Key Concepts
Wage determination
Short-run vs. long-run labor demand
Labor demand shifts.
Topic
Derived Demand for Labor
Difficulty
hard level question
Cognitive Level
understand
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