How does demand in factor markets differ from demand in product markets?

Question

Quizplus · Accepted Answer

In product markets, demand is based on consumer preferences and tastes for the product being offered. In contrast, in factor markets, demand is based on the productivity of workers and the expected revenues that a producer can earn by hiring an additional unit of the factor of production. This means that the demand for a factor of production is more focused on the economics of production rather than consumer tastes and preferences. Therefore, option B is the correct answer.

How Does Demand in Factor Markets Differ from Demand in Product