The Derived Demand for an Input Decreases When

question 83

Multiple Choice

The derived demand for an input decreases when

• A)the price of the input increases.
• B)the price of the output increases.
• C)the price of the input decreases.
• D)the price of the output decreases.

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Definitions:

Normal Good

A good for which demand increases as the income of consumers increases and vice versa.

Demand for Leisure

The desire for free time in which one can enjoy personal activities outside of work.

Labor Supply Curve

A graphical illustration of the relationship between the wage rate and the quantity of labor workers are willing to supply at various wage rates.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute one good for another.