A determinant of the demand for a factor of production is the:
A) price of the factor.
B) marginal cost of the factor.
C) productivity of the factor.
D) quantity of the factor supplied.

Question

Quizplus · Accepted Answer

The productivity of the factor of production is a determinant of the demand for it because as the productivity of a factor of production increases, the demand for it generally increases. Factors of production, such as labor and capital, are demanded by firms in order to increase their productivity and output. Therefore, if the productivity of a factor of production increases, the demand for it will increase as well. The price, marginal cost, and quantity of the factor supplied are also important factors in determining the demand for a factor of production, but they are not the primary determinant.

A Determinant of the Demand for a Factor of Production