The demand for a factor input as a result of the demand for its output is known as

A.

Market demand

B.

Complementary demand

C.

Competitive demand

D.

Derived demand

Correct answer is D

The demand for a factor input as a result of the demand for its output is known as derived demand. This is because the demand for the factor input is derived from the demand for the final product that the factor input is used to produce.

 

For example, the demand for labor is derived from the demand for goods and services that are produced by labor. If the demand for goods and services increases, then the demand for labor will also increase.