The demand for an input used in a fixed proportions technology
A) is identical to the demand for the other inputs.
B) is greater than the demand for the end product itself.
C) lies below the demand for the end product itself.
D) is the same as the demand for the end product itself.

Question

Quizplus · Accepted Answer

In a fixed proportions technology, the input must be used in a specific ratio with the other inputs to produce one unit of output. This means that, unlike in other production technologies, the demand for the input cannot be increased or decreased to adjust for changes in the price or availability of the input. As a result, the demand for the input is determined solely by the level of demand for the end product. Therefore, the demand for the input lies below the demand for the end product itself.

The Demand for an Input Used in a Fixed Proportions