Which of the following examples best illustrates the concept of derived demand?
A)An increase in the price of beef results in an increase in the demand for fish.
B)The higher the demand for automobiles,the greater the demand for steel.
C)The demand for Pepsi varies directly with the price of Coke.
D)The demand for a good varies inversely with its price.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for goods or services resulting from the demand for another good or service. Option B illustrates this concept by showing that the demand for automobiles (end product) leads to a greater demand for the steel (raw material used to make automobiles) needed to produce them. The other options do not demonstrate derived demand.

Which of the Following Examples Best Illustrates the Concept of Derived