<Tr> <Td> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> </Td> </Tr> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> In economics, a factor market refers to markets where services of the factors of production are bought and sold, such as the labor markets, the capital market, the market for raw materials, and the market for management or entrepreneurial resources . </P> <P> Firms buy productive resources in return for making factor payments at factor prices . The interaction between product and factor markets involves the principle of derived demand . Derived demand refers to the demand for productive resources, which is derived from the demand for final goods and services or output . For example, if consumer demand for new cars rises, producers will respond by increasing their demand for the productive inputs or resources used to produce new cars . </P>

The term factor market applies to the market for