Question

What is the definition of derived demand?

a. consumer demand for a product, stimulated by lack of availability of another product
b. demand, due to advertising, for goods and services that are luxuries rather than basic necessities
c. demand for goods and services that are factors of production for other goods and services
d. consumer demand for a product, stimulated by the presence of another product in the marketplace

Answer 1

Letter c is correct. Demand for goods and services that are factors of production for other goods and services.

Step-by-step explanation:

Derived demand is characterized by the ability of one good or service to produce another good and related service. This is a growing demand when other types of products and services are needed to complete the production of some product or service, such as raw materials, labor and capital.

The behavior of derived demand is elastic when demand for final goods increases. An example of a derived demand product is the tires of a car, when car sales increase also increases tire sales.