Principles of Microeconomics / Unit 3 MIC 0203 short lesson, about 20 seconds
Labor Demand Is Derived Demand
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The idea
A firm wants workers only for what they produce, so the demand for labor is derived from the demand for the product. More restaurant meals mean more demand for cooks.
In practice
Nobody hires a pharmacist without customers who want prescriptions filled.
Where people slip
Derived demand is the exam's term. Unit thirteen gives it a number: what one more worker adds to revenue.
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