Demand for labour
Demand for labour is a derived demand, meaning it depends on demand for the final products that labour produces. Firms hire workers based on the additional revenue they generate (marginal revenue product) relative to their wage cost.
Real World
When demand for new iPhones surged in 2023, Apple's suppliers like Foxconn hired tens of thousands of additional assembly workers — illustrating that labour demand derived directly from consumer product demand.
Exam Focus
For 'explain' questions, always state labour demand is derived demand before discussing wage effects.
How well did you know this?