Multiple Choice
Which of the following best describes labor utilization in the context of factors of production?
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0. Basic Principles of Economics
Factors of Production
Multiple Choice
Which of the following is a reason for changes in buyer tastes, affecting the demand for factors of production?
A
An increase in the supply of labor
B
Changes in consumer preferences due to advertising
C
A decrease in the price of raw materials
D
Technological improvements in production
Verified step by step guidance1
Understand that the demand for factors of production (like labor, capital, land) is a derived demand, meaning it depends on the demand for the final goods and services they help produce.
Recognize that changes in buyer tastes or consumer preferences directly affect the demand for final goods and services, which in turn changes the demand for the factors of production used to make those goods.
Analyze each option: an increase in the supply of labor affects supply, not demand; a decrease in the price of raw materials affects production costs, not buyer tastes; technological improvements affect productivity, not buyer preferences.
Identify that 'Changes in consumer preferences due to advertising' directly influence buyer tastes, which then affect the demand for the final product and consequently the demand for factors of production.
Conclude that the correct reason for changes in buyer tastes affecting demand for factors of production is changes in consumer preferences due to advertising.
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