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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

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An example of a derived demand other than labor would be the demand for natural resources, such as oil or gas. These resources are essential inputs in the production of other goods or services, and their demand is derived from the demand for the products that rely on them. For example, the demand for gasoline is derived from the demand for transportation services provided by vehicles using gasoline as a fuel. As transportation demand increases, so does the demand for gasoline, leading to an increased demand for crude oil as a natural resource.

Step by step solution

01

Example of a Derived Demand

An example of a derived demand other than labor would be the demand for natural resources, such as oil or gas, which are essential inputs in the production of other goods or services. In this case, the derived demand emerges from the demand for the products that rely on these natural resources. For instance, the demand for gasoline is a derived demand because it is mainly driven by the demand for transportation services provided by vehicles using gasoline as a fuel. As the demand for transportation services increases, so will the demand for gasoline, which leads to an increased demand for the natural resources required to produce gasoline, such as crude oil.

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