Markets for factors of production are different from product markets in an important way because:
A) the demand for a factor of production is likely to be upward-sloping, in violation of the law of demand.
B) equilibrium is the exception, and not the rule, in factor markets.
C) the demand for a factor of production is a derived demand.
D) the supply-demand characteristics of product markets are not applicable to factor markets.
E) product markets derive their demand from factor markets.

Question

Quizplus · Accepted Answer

The demand for a factor of production is a derived demand, meaning it is based on the demand for the final product it helps to produce. This is different from product markets, where demand is based on consumer preferences and needs. The other options are not necessarily true for all factor markets.

Markets for Factors of Production Are Different from Product Markets