Derived demand by a firm will generally increase if the demand for the firm's output increases.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a factor of production or intermediate good that occurs as a result of the demand for another good or service. If the demand for a firm's output increases, it logically leads to an increase in the demand for the inputs required to produce that output, hence increasing the derived demand for those inputs.

Derived Demand by a Firm Will Generally Increase If the Demand