Which of the following is an example of a firm's derived demand?
A) The demand for a firm's product is a function of the geographical factors.
B) Working more hours per week will increase the income derived from one's job.
C) Workers with higher levels of experience earn more, on average, than workers with lower levels of experience.
D) The wage that a worker earns is a function of his or her human capital.
E) A tractor manufacturer's demand for assembly line workers is inseparably linked to the supply of tractors.

Question

Quizplus · Accepted Answer

A firm's derived demand refers to the demand for a factor of production such as labor or capital, which is a result of the demand for the firm's product or service. In this case, the demand for assembly line workers at a tractor manufacturer is dependent on the demand for tractors. As the demand for tractors increases, the manufacturer will require a greater number of workers to assemble the machines, leading to an increase in the demand for labor.

Which of the Following Is an Example of a Firm's