The demand curve for factors of production?

A. is perfect elastic
B. slopes upwards
C. slopes of downwards
D. is perfectly inelastic

Correct Answer:

Option C – slopes of downwards

Explanation

The factors of production demand curve indicate the quantity of a factor demanded at alternative factor prices. The demand curve is downwards sloping from left to right.

An example is given below for the demand curve of labour, showing how wage rate affects the demand for labour.