The demand for factors of production is said to be

Analyze the question: It asks what kind of demand applies to factors of production (land, labour, capital, entrepreneur).

Explain the concept: Nobody wants a factor of production for its own sake. A firm hires labour, rents land or buys machines because they help produce goods and services that consumers want. So the demand for a factor depends on the demand for the product it helps to make. This is called derived demand.

Step by step:

• A bakery in Lagos hires more bakers only if people want more bread. If demand for bread rises, the demand for bakers, flour and ovens rises too.
• If demand for bread falls, the demand for these factors falls as well.
• So factor demand is derived from the demand for the final product.

Checking the options:

• A. Joint demand: demand for goods used together, such as bread and butter. Factors can be jointly demanded, but this is not the standard description of factor demand.
• B. Complementary demand: goods that are used together, such as a car and petrol. This is not the defining feature here.
• C. Derived demand: demand for something because of the demand for the product it helps make. This is correct.
• D. Composite demand: demand for a good with several uses, such as steel or electricity. This does not fit.

Tip: Whenever you see "factors of production" together with "demand", think derived demand. Ask yourself, "Is it wanted for itself, or for what it can produce?" If it is for what it produces, the demand is derived.