The derived demand curve for a resource is downward sloping because
A) the demand for products that utilize the resource is directly related to the price of the resource.
B) the marginal productivity of resources will decline as their price increases.
C) as the price of a resource rises, other resources will be less desirable than the higher priced resource.
D) other resources will be substituted for a resource that increases in price.

Question

Quizplus · Accepted Answer

The derived demand curve for a resource is downward sloping because as the price of a resource increases, firms will substitute other, cheaper resources for the more expensive one, reducing the quantity demanded of the higher-priced resource.

The Derived Demand Curve for a Resource Is Downward Sloping