What is the definition of derived demand?
Derived demand is the demand that arises for factors of production. In other words, this is demand that is derived from the demand for goods and services.
What is the marginal revenue product of labour (MRP of labour)? What is the formula for its calculation? How does it affect how much labour a firm hires?
The MRP of labour tells the additional revenue earned by the firm by hiring an extra unit of labour. That is the change in total revenue brought about by the addition of one more worker. Formula for MRP of labour = MP of labour x Marginal unit of output revenue The firm maximizes its profit by hiring labour up to the point where MRP of labour equals the wage rate.
Food is considered a necessity. So is the demand for food elastic or inelastic?
The elasticity of demand for food is inelastic. Food has few close substitutes as it is broadly defined, therefore, it is difficult to find a substitute as a group. Hence, the demand for food is inelastic.