Factor demand is based on
A)marginal productivity theory.
B)the law of supply.
C)game theory.
D)the principle of economies of scale.

Question

Quizplus · Accepted Answer

Factor demand is based on the marginal productivity theory, which states that firms will hire additional units of a factor of production as long as the marginal revenue product of that factor is greater than or equal to its marginal cost. This theory explains how firms determine their demand for labor, capital, and other factors of production. The law of supply, game theory, and the principle of economies of scale are not directly related to factor demand.

Factor Demand Is Based on