Which of the following is an example of a firm's derived demand?
A)Workers with higher levels of education earn more, on average, than workers with lower levels of education.
B)Factors that decrease the demand for labor will decrease the equilibrium wage.
C)A tractor manufacturer's demand for assembly-line workers is inseparably linked to the supply of tractors.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a factor of production that arises from the demand for the final good or service it helps to produce. In the case of the tractor manufacturer, the demand for assembly-line workers is derived from the demand for tractors, as more tractors produced means a higher demand for workers to assemble those tractors. A is incorrect because it describes a correlation between education level and earnings, but not necessarily a derived demand. B is incorrect because it describes a general relationship between labor demand and wages, but not necessarily a derived demand.

Which of the Following Is an Example of a Firm's