Derived demand:
A) is the sum total of all factors of production for a given good or service.
B) refers to the demand for variable inputs when at least one fixed input exists.
C) refers to the supply decisions of a final good influencing the demand for the inputs needed to make it.
D) is only computed for the long-run demand decisions based on short-run marginal changes.

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for inputs that are necessary to produce a final good or service. Therefore, the supply decisions of a final good affect the demand for the inputs needed to produce it. Option A is incorrect because it refers to total factor demand, which includes the demand for all inputs used in production, not just those derived from final demand. Option B is incorrect because it refers to a specific type of demand, not derived demand. Option D is incorrect because derived demand can be calculated for both short-run and long-run decisions.

Derived Demand