Hot Coffee Inc. hires workers and buys coffee roasting machines so it can serve

Question

Hot Coffee Inc. hires workers and buys coffee roasting machines so it can serve fresh roasted coffee to its customers. The demand for ________ is a derived demand because ________.

only workers; there is a limited number of people willing to work in coffee shops

neither workers nor roasting machines; derived demand only applies to actual products produced for customers

only workers; workers can actually negotiate their wages

only roasting machines; capital equipment can be resold in other markets

both workers and roasting machines; both are used to produce and sell coffee

only workers; there is a limited number of people willing to work in coffee shops

neither workers nor roasting machines; derived demand only applies to actual products produced for customers

only workers; workers can actually negotiate their wages

only roasting machines; capital equipment can be resold in other markets

both workers and roasting machines; both are used to produce and sell coffee

Explanation / Answer

Ans. Both workers and roasting machines; both are used to produce and sell coffee

Because the demand for inputs (Workers and coffee machines) depends upon the output (coffee) that firms are willing to sell. If the demand for coffee is high, the firm will demand more of workers and coffee machines.

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