An input demand curve represents:
A)how the cost-minimizing amount of input varies with the level of output.
B)how the cost-minimizing output varies with an input's price.
C)how the cost minimizing amount of input changes with the input's price.
D)how the cost minimizing output varies with the output price.

Question

Quizplus · Accepted Answer

An input demand curve represents how the cost-minimizing amount of input changes with the input's price. It shows the quantity of input demanded at each input price, assuming all other factors remain constant. As the input price increases, the demand for input decreases, as firms try to minimize their costs by using less of the expensive input and substituting it with cheaper inputs. An input demand curve shows how the amount of input demanded varies with changes in the price of the input while keeping the level of output constant. It represents the cost-minimizing amount of input that a firm would use at different input prices to produce a given level of output. Therefore, option C is the correct choice. Options A and B do not accurately describe what is shown by an input demand curve, and option D is not applicable to the concept of input demand.

An Input Demand Curve Represents