The derived demand for a factor tends to be inelastic if the demand for the product tends to be:
A)very inelastic.
B)very elastic.
C)moderately elastic.
D)capable of being met by a variety of modes of production.
E)very capricious and volatile.

Question

Quizplus · Accepted Answer

If the demand for the product is very inelastic, it means that consumers are willing to pay a high price for it regardless of changes in its price or other factors. This makes the demand for the factor that produces the product relatively stable and hence inelastic.

The Derived Demand for a Factor Tends to Be Inelastic