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

Step 1: Analyze the question The question asks for the term describing demand for a factor input (land, labour, capital, or entrepreneurship) that exists because there is demand for the product it helps to make.

Step 2: Explain the concept Factors of production are not wanted for their own sake. A firm hires them only because consumers want the goods or services they produce. This kind of demand is called derived demand, because it is derived from the demand for the final product.

Examples:

• Demand for bricklayers and cement is derived from the demand for houses.
• Demand for bakers and flour is derived from the demand for bread.
• Demand for tailors and fabric is derived from the demand for clothes.

Step 3: Check each option

• A. Market demand is the sum of all individual consumers' demand for a good at various prices. It has nothing to do with factor inputs.
• B. Complementary demand (joint demand) is demand for goods used together, such as bread and butter, or cars and fuel.
• C. Competitive demand is demand for goods that are substitutes, such as Indomie and spaghetti.
• D. Derived demand is demand for a factor input that comes from demand for the output it produces. This matches the question exactly.

Step 4: Answer The correct option is D. derived demand.

Exam tip: Whenever a question says "demand for a factor/input because of demand for the output," think "derived". Remember it this way: the demand for the input is derived from the demand for the product. Also keep the others straight: complementary = used together, competitive = substitutes, joint = produced together.