Question

Other than the demand for labor, what would be another example of a "derived demand?"

Short answer

A suitable example of derived demand other than labor demand is the demand for raw materials, such as steel. The demand for steel is derived from the demand for products made from steel, like automobiles, construction materials, and appliances. The demand for steel is indirectly influenced by consumer needs for finished products, which leads to increased demand for steel as a primary input in production.

Step-by-step solution

Identify the Example

A good example of derived demand besides labor demand is the demand for raw materials, such as steel. The demand for raw materials is derived from the demand for finished products that are produced using those raw materials.

Explain the Derived Demand

The demand for steel is derived from the demand for products made from steel, such as automobiles, construction materials, and appliances. When consumers want more automobiles, for example, manufacturers will increase their production, leading to an increase in the demand for steel. The demand for steel in this case is not due to the direct need for steel by consumers but rather stems from their demand for automobiles, which in turn leads to a higher demand for steel as a primary input in automobile production.