In the factor market, firms demand:

Question

Quizplus · Accepted Answer

The factor market involves the buying and selling of factors of production such as labor, materials, land, capital, and entrepreneurship. Therefore, firms demand factors of production such as labor, materials, land, capital, and entrepreneurship to use them in the production process. Option A is incorrect because wages, rents, interest, and profit are payments that firms make to factors of production, not demands. Option B is incorrect because goods and services are not factors of production. Option D is incorrect because firms supply goods and services in the product market and demand factors of production in the factor market.

In the Factor Market, Firms Demand