labor is the most specific component in the factor market. Lab our is the physical and psychological involvement of a person to receive an effective response. Labor demand is the number of workers needed to complete the given task at the given period of time.
The main factor that may lead to an increase in the labor demand in a county is the “wage rate or salary.” Labor demand and wage rate or salary ha inverse relationship. If the wage rate increases then the demand for the labor will decrease. Labor is the high cost to the company. When the wage rate decrease then the labor demand will increases. Labor become a cheap factor for the company. If the output of a company increases, the demand for labor will increase to produce more and more outputs.
When the customer demands increases, the demand for labor will increase. The company needs more labors to produce more outputs. If customer demand decrease for the particular product demand for the labor will decrease.