How does demand in factor markets differ from demand in product markets?
A)The demand for a factor of production is difficult to determine.
B)The demand for a factor of production is influenced by workers' productivity and by the producers' expected sales revenues, not by tastes and preferences of consumers.
C)Demand for a factor of production is based on the tastes and preferences of firms.
D)Demand for a factor of production is based on the tastes and preferences of resource owners.

Question

Quizplus · Accepted Answer

In product markets, demand is based on the tastes and preferences of consumers, while in factor markets, demand is based on the productivity of workers and the expected revenues of producers. This is because the demand for factors of production is derived from the demand for the products they help produce, rather than directly from consumer preferences. Therefore, option B is the correct answer.

How Does Demand in Factor Markets Differ from Demand in Product