Principles of Economics (Second Edition)
Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
Question
Book Icon
Chapter 14, Problem 1QFR
To determine

To explain:

The reasons demand for factor inputs is considered as derived demand.

Expert Solution & Answer
Check Mark

Explanation of Solution

Demand for factors is the demand for factor inputs at different factor prices.Demand for a good is the quantity demanded of a good at different prices of that good.

A higher demand for a good implies that the production of that good increases. As a result, the demand for factor inputs required for production of that good increases. This means that demand for factor inputs is derived from the demand of the goods in production of which those factors are employed. Hence, factor demand is derived demand.

Economics Concept Introduction

Demand for factors:It is the demand for factor inputs at different factor prices.

Demand for good:It is the quantity demanded of a good at different prices of that good.

Derived demand:When the demand for a good or service arises as the outcome of the demand for another good or service, it is referred as derived demand.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
When prices of the factor input falls the supply curve shifts rightward  It is true or not????????....
if leisure is an inferior good, what can you say about the slope of the labor supply curve?
The demand for a factor of production (productive resource) is derived from the demand for the good the factor produces True False
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Microeconomics
Economics
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Macroeconomics
Economics
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Cengage Learning