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 good or factor of production resulting from the demand for another good or service. In this case, the demand for leather is derived from the demand for shoes. If the demand for shoes declines, it logically follows that the demand for leather, which is used to make shoes, will also decline.

Which of the Following Statements Best Illustrates the Concept of Derived