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Chapter 4: Problem 21

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

Short Answer

Expert verified
An example of a derived demand, other than labor, is the demand for raw materials in manufacturing. This demand is derived from the demand for the final products made using these materials, such as cars, furniture, or electronic devices. As the demand for these finished products increases, so does the demand for the raw materials needed for their production.

Step by step solution

01

Identify an Example of Derived Demand

One example of a derived demand, aside from labor, is the demand for raw materials in manufacturing.
02

Explain the Derived Demand

The demand for raw materials, such as steel, wood, or plastic, is derived from the demand for the final products that are made using these materials - like cars, furniture, or electronic devices. As the demand for these finished products increases, so does the demand for the raw materials needed for their production. This makes the demand for raw materials a derived demand, as it is dependent on the demand for the products they are used to create.

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