The demand for workers in a competitive firm is called derived demand because it depends mainly on the:
Correct answer: B. Demand for the firm's output
- A. Workers' personal savings
- B. Demand for the firm's output
- C. Government's tax collection
- D. Firm's historical wage bill
Explanation
Firms hire labour because workers help produce goods and services that consumers demand. Thus, demand for labour is derived from the demand and productivity of the firm's output rather than existing independently.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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