Derived demand is directly determined by:

Question

Quizplus · Accepted Answer

Derived demand refers to the demand for a good or service that arises as a result of a demand for another good or service. In other words, the demand for an input like labor or capital is derived from the demand for the output that it produces. The profitability of using inputs to produce output is a key determinant of derived demand, as firms will only demand inputs if they expect to generate enough revenue from selling the output to cover their costs and earn a profit. While utility, consumer desires, and personal consumption may indirectly affect derived demand through their impact on overall market demand, they are not direct determinants of derived demand.

Derived Demand Is Directly Determined By