Derived Demand

INTRODUCTION

Today we start to study factor markets. Today we will focus on the concept of derived demand, how a business makes decisions about how much labor to employ, and how that affects market demand for labor and the labor market equilibrium. You may read the text chapter identified below in the homework section and watch the related videos for help in understanding this material. This page contains all the information you need for today's class. Use the table of contents on the right to help you navigate.

HOMEWORK

Read McConnell and Brue (Chapter 25) and watch the following videos.

Khan Academy videos

• Marginal Revenue Product Curve (a firm's demand for labor)

• How a firm determines the quantity of labor to hire

ASSESSMENTS AND ACTIVITIES

1. Problem of the Day: Not today! But you should do Activity 49 from the packet on factor markets.

2. Lecture: Derived Demand

ENRICHMENT

Related Readings

• Costs of Unemployment

• Productivity and Unemployment

• Labor Unions

• Unemployment