What is a derived demand in economics?

Derived demand—in economics—is the demand for a good or service that results from the demand for a different, or related, good or service. It is a demand for some physical or intangible thing where a market exists for both related goods and services in question.

What is an example of a derived demand?

Thus the demand for labour is a derived demand from the demand for goods and services. For example, if the demand for a good such as wheat increases, then this leads to an increase in the demand for labour, as well as demand for other factors of production such as fertilizer.

Why is it called a derived demand?

The demand for each of the factors of production is often referred to as a "derived" demand to emphasize the fact that the relationship between the factor's price and the quantity of the factor demanded by firms employing it in production is directly dependent on consumer demand for the final product(s) the factor is ...

What is direct and derived demand with example?

Direct and derived demand. Direct demand is the demand for a final good. Food, clothing and cell phones are an example of this. Also called autonomous demand, it's independent of the demand for other products. Derived demand is the demand for a product that comes from the usage of others.

What is derived demand give two real world examples?

The Chain of Derived Demand

For example, consumer demand for clothing creates a demand for fabric. To meet this demand, a raw material like cotton is harvested, then turned into processed materials by ginning, spinning, and weaving into cloth, and finally sewn into the garments purchased by the end consumers.

Derived Demand

What is the definition of derived demand quizlet?

Derived Demand. The demand for a resource that arises from the demand for the good produced by the resource.

Which of the following examples best illustrates the concept of derived demand?

the market demand curve for labor. Which of the following most clearly illustrates the concept of "derived demand"? An increase in the demand for new houses leads to an increase in the demand for construction workers.

What is autonomous and derived demand?

Definition. Autonomous demand refers to the demand for products and services that is not influenced or determined by other goods. On the other hand, derived demand refers to the demand for products and services that is determined and influenced by the extent and nature of other activities.

Why is derived demand important?

Significance of Derived Demand

Derived demand influences the market price of the derived goods. Derived demand for any goods or services also creates demand for related or incidental goods. Hence, derived demand is dependent on the demand for an intermediate good or service.

Is bread a derived demand?

types of demand explained

For example, flour and sugar are demanded because there is demand for bread. Labour is demanded to construct the highway because there is a demand for good roads. So, labour, flour and sugar are “derived” demand commodities.

What is derived demand in industrial market?

The demand for industrial products and services does not survive by itself. It is derived from the ultimate demand for consumer goods and services. Therefore, industrial demand is called derived demand.

How is market demand derived?

Market demand is obtained by adding together the individual demands of all the households in the economy. Because the individual demand curves are downward sloping, the market demand curve is also downward sloping: the law of demand carries across to the market demand curve.

What is effective and derived demand?

Effective demand is the amount of any quantity actually sold in the markets while derived demand depends on the amount of another good or service and therein demanded due to that other factor e.g. labor is demanded when new capital machinery is acquired by a firm.

Which of the following is an example of derived demand group of answer choices?

Whenever several items are required to make a particular commodity, the demand for various commodities is termed as the 'Derived Demand'. For example, the demand for building is a direct demand and demands for cement, bricks, sand, timber, labour, etc., are called as derived demands.

How does derived demand affect the labor market?

The firm's demand for labor is a derived demand; it is derived from the demand for the firm's output. If demand for the firm's output increases, the firm will demand more labor and will hire more workers. If demand for the firm's output falls, the firm will demand less labor and will reduce its work force.

What is meant by autonomous demand?

The demand for a product that is not associated with the demand of other products is known as autonomous or direct demand. The autonomous demand arises due to the natural desire of an individual to consume the product.

What is derived demand for labour?

The demand for labour is a derived demand, which means it is ultimately based on demand for the product that labour makes. If consumers want more of a particular good or service, more firms will want the workers that make the product.

What are the 4 types of demand?

Individual demand and Market demand. Joint demand. Composite demand. Direct and Derived demand.

Which of the following statements best illustrates the economic concept of derived demand?

Which of the following statements best illustrates the concept of derived demand? A decline in the demand for shoes will cause the demand for leather to decline. When economists say that the demand for labor is a derived demand, they mean that it is: related to the demand for the product or service labor is producing.

What is derived demand give an example of derived demand for a hotel in your town?

For Example – In tours and travels, certain spots suddenly become tourist places when shown in a movie or when they receive popularity. So the hotels and restaurants start becoming full. Now there would be derived demand. These hotels and restaurants will require services.

When economists refer to resource demand being a derived demand they mean that the demand for the resource?

When economists refer to resource demand being a derived demand, they mean that the demand for the resource: Depends on the demand for the goods and services produced by the resources.

Which of the following correctly defines and describes derived demand?

Which of the following correctly defines and describes derived demand? The demand for a resource is said to be a derived demand, meaning it arises from the demand for the products it can produce.

What does it mean to say that the demand for a factor is a derived demand quizlet?

What does it mean to say that the demand for a factor is a derived demand? It means that it is the result of some other demand.

What is the definition of derived demand Chapter 14?

What is the definition of derived demand? Demand for goods and services that are factors of production for other goods and services. Income is generated through the (1) of goods and services.

What does latent demand mean?

demand for a product which can satisfy a want which is unable to be satisfied by any existing product.