Question

Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a Select one: a. marginal product of demand. b. secondary demand. c. derived demand. d. compensatory demand.

Answer 1

Answer:

The correct answer is option c.

Explanation:

Derived demand can be defined as demand for a good or service which is based on the demand for another good or service. The demand for factors of production is derived from or depend upon the goods and services they are used to produce.  

So the demand for factors of production is termed as derived demand, as it depends upon the consumer's demand for a good or service.  

So if the demand for a good decrease, the demand for the factors of production used in its production will decrease as well.