A demand for a factor of production is said to be "derived" because the factor's demand depends
A) on the demand for the good or services it helps to make.
B) heavily on public choice.
C) entirely on corporate advertising.
D) entirely on the cost of the factor.
E) heavily on government policy.

Question

Quizplus · Accepted Answer

A factor of production is said to be "derived" because its demand is derived from the demand for the good or service it helps to make. For example, the demand for steel is derived from the demand for cars, buildings, and other products that use steel. Therefore, the demand for steel (factor of production) is dependent on the demand for cars, buildings, and other products (end products).

A Demand for a Factor of Production Is Said to Be