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Chapter 4: Q. 21 (page 105)

Other than the demand for labor, what would be another example of a 鈥渄erived demand?鈥�

Short Answer

Expert verified

Examples. Employees are in high demand among producers. Another example is that demand for steel leads to the derived need for steelworkers because steelworkers are required for steel production. Steel's price rises in tandem with its demand.

Step by step solution

01

Definition

Derived Demand:

Derived demand is the market demand for a specific manufacturing element or intermediate good as a result of a requirement for another intermediate or final product. The quantity of a product that an economy is willing and able to consume in a certain time frame is known as demand. Derived demand is defined as demand that is based on the need for a different product.

02

Explanation

The demand for labor is derived from the demand for the good whose manufacture necessitates the use of labor. As a result, it's a derived demand. The amount of good produced by a firm is determined by the price of the good, hence defining the demand for human or physical capital. As a result, physical capital demand is likewise a derived need. Examples. Employees are in high demand among producers. Another example is that demand for steel leads to the derived need for steelworkers because steelworkers are required for steel production. Steel's price rises in tandem with its demand.

03

Conclusion

Therefore, labor demand is determined by the market of the product.

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Most popular questions from this chapter

Imagine that to preserve the traditional way of life in small fishing villages, a government decides to impose a price floor that will guarantee all fishermen a certain price for their catch.

a. Using the demand and supply framework,

predict the effects on the price, quantity

demanded, and quantity supplied.

b. With the enactment of this price floor for fish, what are some of the likely unintended

consequences in the market?

c. Suggest some policies other than the price floor to make it possible for small fishing villages to continue.

Predict how each of the following economic changes will affect the equilibrium price and quantity in the financial market for home loans. Sketch a demand and supply diagram to support your answers.

a. The number of people at the most common ages for home-buying increases.

b. People gain confidence that the economy is growing and that their jobs are secure.

c. Banks that have made home loans find that a larger number of people than they expected are not repaying those loans.

d. Because of a threat of a war, people become uncertain about their economic future.

e. The overall level of saving in the economy diminishes.

f. The federal government changes its bank regulations in a way that makes it cheaper and

easier for banks to make home loans.

Why are the factors that shift the demand for a product different from the factors that shift the demand for labor? Why are the factors that shift the supply of a product different from those that shift the supply of labor?

Which of the following changes in the financial market will lead to a decline in interest rates:

a. a rise in demand

b. a fall in demand

c. a rise in supply

d. a fall in supply

In the financial market, what causes a movement along the supply curve? What causes a shift in the supply curve.
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