Which of the following is the best example of a derived demand?
A)An increase in the wage rate causes firms to substitute capital for labour.
B)A decrease in the price of internet connection will increase the demand for tablet computers.
C)An increase in the price of butter increases the demand for margarine.
D)An increase in demand for cars will increase the demand for auto workers.
E)A decrease in interest rates increases the demand for housing.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a good or service that is derived from the demand for another good or service. In this case, the demand for cars creates a derived demand for auto workers as the production of cars requires labor.

Which of the Following Is the Best Example of a Derived