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

Question

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Factor demand is a derived demand, meaning that it is based on the demand for the final product. In contrast, product markets involve the demand and supply of final goods and services. Option A is incorrect, as disequilibrium can exist in both factor and product markets. Option B is also incorrect, as the factor supply function is typically upward-sloping. Option D is likewise incorrect, as factor demand is usually downward-sloping.

Factor Markets Are Different from Product Markets in an Important