|Book Edition||7th Edition|
What is a derived demand?
"A derived demand is a demand for a good or service that is derived from the demand for another good or service." If we take the example, food and clothing are basic necessities of life and people are born with an innate need for both food and clothing. If we look at the market behavior, one finds that there is a strong interdependence between food and clothes. The same person may need both these goods in different proportions depending on his/her financial status, climatic conditions and social factors like marriage etc.