Because a firm's demand for a factor of production is derived from its decision to supply a good in the market,it is called a:
A) production demand.
B) derived demand.
C) demand-supply transfer.
D) secondary demand.
E) differentiated demand.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a factor of production that arises from the demand for the final product or service that it helps to produce. The demand for a factor of production, such as labor or raw materials, is thus derived from the demand for the output of the firm. The other choices are not accurate descriptions of this type of demand relationship.

Because a Firm's Demand for a Factor of Production Is