Which of the following statements best illustrates the concept of derived demand?
A) As income goes up, the demand for farm products will increase by a smaller relative amount.
B) A decline in the price of margarine will reduce the demand for butter.
C) A decline in the demand for shoes will cause the demand for leather to decline.
D) When the price of gasoline goes up, the demand for motor oil will decline.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a particular product or resource that arises as a result of the demand for another product or service. In this case, the decline in the demand for shoes reduces the demand for leather since leather is a key input in the production of shoes. Therefore, choice C best illustrates the concept of derived demand. The other choices do not involve two interrelated products or services.

Which of the Following Statements Best Illustrates the Concept of Derived