Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 12, Problem 1CQ
To determine
Explain the statement “the demand for resources is a derived demand”.
Expert Solution & Answer
Explanation of Solution
The derived demand is a famous economic concept explains the demand for goods and services is bring about from the demand for an intermediate or other related goods and services. The demand for resources is derived demand means, demand for factors of production (land, labor capital, machinery and so on) is due to there is a demand for goods and services in the market.
Generally employment of resources is negatively related to its price. If the price of the resources increases it leads to increase the production cost which in turn reduces the profit for the producers. This induce the producers to produce less. Thus, the resources are employed less amount.
Economics Concept Introduction
Demand: Demand refers to the total value of goods and services that are demanded at a particular price in a given period of time.
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Microeconomics: Private and Public Choice (MindTap Course List)
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