The demand curve for a factor of production is
A) the same as the factor's supply curve.
B) upward sloping.
C) the same as the factor's value of marginal product curve.
D) vertical.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The demand for a factor of production is derived demand, meaning that it is based on the demand for the final product that the factor helps produce. The value of marginal product (VMP) curve shows the additional revenue generated by adding one unit of the factor, and the demand curve for the factor shows the maximum amount that producers are willing to pay for that factor at each quantity. Therefore, the demand curve for a factor of production is the same as the factor's value of marginal product curve.

The Demand Curve for a Factor of Production Is