Factor markets are different from product markets in an important way because

Question

Quizplus · Accepted Answer

Factor markets are different from product markets because the demand for a factor of production is a derived demand. This means that the demand for a factor of production is not derived from consumer demand for a good or service, but rather from the demand for the product that the factor of production helps to produce. This results in a different set of supply and demand dynamics for factor markets compared to product markets. Option A and C are not correct - equilibrium is still the goal for both factor and product markets, and the law of demand still holds for factors of production as well.

Factor Markets Are Different from Product Markets in an Important