The demand for inputs is a derived demand because
A) it does not come from competitive markets.
B) it depends on the demand for outputs.
C) it is derived from nature.
D) it is derived from production.

Question

Quizplus · Accepted Answer

The demand for inputs (like labor, raw materials, etc.) is considered a derived demand because it directly depends on the demand for the final goods or outputs that these inputs help to produce. If there is high demand for a product, the demand for the inputs needed to make that product also increases, and vice versa.

The Demand for Inputs Is a Derived Demand Because