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

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a good or service that arises from the demand for another good or service. In this case, the demand for auto workers is derived from the demand for cars. As the demand for cars increases, the demand for auto workers to produce those cars also increases.

Which of the Following Is the Best Example of a Derived