Derived demand:
A. is the sum total of all factors of production for a given good or service.
B. is only computed for the long-run demand decisions based on short-run marginal changes.
C. refers to the demand for variable inputs when at least one fixed input exists.
D. refers to the supply decisions of a final good influencing the demand for the inputs needed to make it.
Answer: D
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A perfectly competitive market is in long-run equilibrium. At present there are 100 identical firms each producing 5,000 units of output. The prevailing market price is $20. Assume that each firm faces increasing marginal cost
Now suppose there is a sudden increase in demand for the industry's product which causes the price of the good to rise to $24. Which of the following describes the effect of this increase in demand on a typical firm in the industry? A) In the short run, the typical firm increases its output and makes an above normal profit. B) In the short run, the typical firm increases its output but its total cost also rises, resulting in no change in profit. C) In the short run, the typical firm's output remains the same but because of the higher price, its profit increases. D) In the short run, the typical firm increases its output but its total cost also rises. Hence, the effect on the firm's profit cannot be determined without more information.
An effluent fee is an example of
A) a government policy to correct for an external benefit. B) a government policy to promote the production of a product with an external cost. C) a government policy to promote the production of a product with an external benefit. D) a government policy to correct for an external cost.
Which of the following categories accounts for about one-third of the total spending of state and local governments?
a. Community development b. Health and sanitization c. Education d. Transportation
If there is an increase in the demand for a good, what will happen to the equilibrium price and quantity of the good exchanged?
a. Decrease Decrease b. Increase Decrease c. Decrease Increase d. Increase Increase