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Explain the meaning of derived demand

Economics Jan 19, 2021

Explain the meaning of derived demand. Discuss an instance where a resource's demand changed in our economy and explain why.

Expert Solution

Derived demand is created when one complementary good, relative good, or some other product is in high demand and thus is indirectly creating demand for some other related product or service. For example, let's assume the long distance trucking industry is booming. There is high demand for trucks and associated vehicles which is creating a high demand for gasoline. For an example of derived demand in our economy, as more people began moving to the suburbs, an increase in the demand for swimming pools occurred. This derived a demand for pool chemicals such as chlorine. A derived demand was created for pool chemicals used to keep swimming pools clean.

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