The market price of a factor of production that is in fixed supply is determined only by demand.

Name: The market price of a factor of production that is in fixed supply is determined only by demand.
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Question

Quizplus · Accepted Answer

Since the factor of production is in fixed supply, its quantity cannot be changed in response to changes in demand. As a result, the market price of the factor will be determined solely by demand, as suppliers cannot increase or decrease supply to influence the price.

The Market Price of a Factor of Production That Is