Other than the demand for labor, what would be another example of a “derived demand?”

Derived demand is defined as the demand of services and goods which is derived from the demand of different other and related goods and services. Derived demand has an effective impact on the price of goods and services.

In the labor market, the demand for labor depends or is related to the demand of the goods and services that are produced using labor, so if the demand for these goods and services increase it will automatically increase the demand for the labor and vice-versa.

Let us take another example of derived demand like the cement industry. In the cement industry, demand for cement leads to derived demand for cement workers. An increase in demand for cement leads to an increase in the labor who produce cement. Now the companies need to increase their production of cement which is possible only when they hire more laborers so the demand for labor increases.