Asked by Riley Bynum on Jul 23, 2024
Verified
Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a
A) marginal product of demand.
B) secondary demand.
C) derived demand.
D) compensatory demand.
Derived Demand
Derived demand occurs for a factor of production when the demand for another good or service drives it, such as the demand for raw materials increasing due to higher demand for the final product.
Factor of Production
An economic resource used in the production of goods and services, including labor, capital, land, and entrepreneurship.
Market
A group of buyers and sellers of a particular good or service.
- Elucidate the idea behind the marginal product of labor.
Verified Answer
IH
Isaac HwangJul 24, 2024
Final Answer :
C
Explanation :
The term "derived demand" refers to the demand for a factor of production or input that arises from the demand for the output it helps to produce. Since a firm's need for inputs like labor or raw materials depends on the demand for the products they are used to make, this demand is considered "derived" from the demand for those products.
Learning Objectives
- Elucidate the idea behind the marginal product of labor.