Q:

What is an example of derived demand?

A:

One example of derived demand is the consumer request for crude oil derived from the consumer need for gasoline. Derived demand refers to the consumer's need for a certain product of which another product is made.

Another example is how the demand for designer clothing creates a derived demand for fabrics and textiles. Economists use the derived demand theory to predict what materials will go up in price in accordance with whatever consumer product goes up in demand. For example, if the demand for leather belts rises, the cattle handlers who sell the cowhides to the leather suppliers can plan for an increased derived demand for their product.


Is this answer helpful?

Similar Questions

  • Q:

    What is the economic meaning of demand?

    A:

    In economics, demand is a measure of how much buyers want or need a product. For example, consumers may collectively avoid buying a particular product because they don't understand it or don't believe it has value, resulting in low demand.

    Full Answer >
    Filed Under:
  • Q:

    What is demand-pull theory?

    A:

    In the Keynesian economics model, demand-pull theory posits that when demand for products and services goes beyond existing supplies, the result is inflation. According to demand-pull inflation, when there is too much money and too few goods, the inevitable result is that prices go up.

    Full Answer >
    Filed Under:
  • Q:

    What is the difference between independent demand inventories and dependent demand inventories?

    A:

    The Management Study Guide states that the main difference between independent demand inventories and dependant demand inventories is that demand for items under independent demand is not dependent on demand for any other items. However, demand for items under dependent demand usually depends on demand for other items. Examples of items under the independent demand category include finished cars, while those in dependent demand include raw materials.

    Full Answer >
    Filed Under:
  • Q:

    What is the law of demand?

    A:

    The law of demand is a foundational concept of economics which indicates that demand for a particular good rises as the price for the product falls. Inversely, when the price for a good rises, demand falls.

    Full Answer >
    Filed Under:

Explore