There will be an increase in factor demand because of a(n)_____ in the price of the _____.
A)increase;factor
B)increase;good the factor produces
C)decrease;factor
D)decrease;good the factor produces

Question

Quizplus · Accepted Answer

An increase in the price of a good the factor produces will lead to an increase in demand for that factor as producers would want to produce more of the good and will require more of that factor. A decrease in the price of the good the factor produces will lead to a decrease in demand for that factor. Option A and C are incorrect because an increase in price will not lead to a decrease in factor demand and a decrease in price will not lead to an increase in factor demand. Option D is incorrect because a decrease in the price of the good the factor produces will not lead to an increase in factor demand.

There Will Be an Increase in Factor Demand Because of A(n)_____