The Demand for Any Factor of Production in a Competitive

question 67

Multiple Choice

The demand for any factor of production in a competitive industry depends on

• A) its productivity and upon the value of its output in the marketplace.
• B) its productivity and the productivity of all other inputs.
• C) the productivity of all the other inputs and how these inputs are valued in the marketplace.
• D) the amount of the factor that is used and the amounts of all the other factors that are used.

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Definitions:

Loss Aversion Technique

A psychological strategy used in various fields, including investing and marketing, that leverages the individuals’ tendency to prefer avoiding losses to acquiring equivalent gains.

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Affect Heuristic

A mental shortcut used in decision making that involves relying on current emotions to evaluate the desirability and risks of different options.

Real Buying Power

The actual amount of goods and services that can be purchased with a unit of currency, taking into account inflation and other factors affecting price levels.