A determinant of the demand for a factor of production is the:
A) price of the factor.
B) marginal cost of the factor.
C) quantity of the factor supplied.
D) price of the product made with the factor.

Question

Quizplus · Accepted Answer

The price of the product made with the factor is a determinant of the demand for the factor of production. As the price of the product increases, firms will demand more of the factor to produce more output, and vice versa. The other options listed are determinants of the supply of the factor, not the demand.

A Determinant of the Demand for a Factor of Production