for labor is called a “derived demand.” Here are some examples of derived demand for labor:

• The demand for chefs is dependent on the demand for restaurant meals.

• The demand for pharmacists is dependent on the demand for prescription drugs.

• The demand for attorneys is dependent on the demand for legal services.

As the demand for the goods and services increases, the demand for labor will increase, or shift to the right, to

meet employers’ production requirements. As the demand for the goods and services decreases, the demand

for labor will decrease, or shift to the left. Table 4.2 shows that in addition to the derived demand for labor,

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4.1 • Demand and Supply at Work in Labor Markets 91

demand can also increase or decrease (shift) in response to several factors.

Factors

Results

Demand for

When the demand for the good produced (output) increases, both the output price and profitability

Output
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