The demand for capital is similar to the demand for labour in that
A)the marginal product of labour is derived from the marginal product of capital.
B)the marginal revenue product curve for labour is the same as the marginal revenue product curve for capital.
C)both are derived demands.
D)both are inelastic at high prices and elastic at low prices.

Question

Quizplus · Accepted Answer

Both the demand for capital and the demand for labor are derived demands, meaning that they are demanded for the output they help produce rather than being demanded for their own sake. The demand for labor is derived from the demand for the goods and services it produces, while the demand for capital is derived from the demand for the output it helps produce. Therefore, both are considered derived demands.

The Demand for Capital Is Similar to the Demand for Labour