What is the difference between derived demand and joint demand.
There are four types of demand.The amount of product buyers are willing and able to purchase at a given price is called demand.
If one can be used in place of the other, commodities are replacements.Substitute goods compete for consumers' income.They compete for the consumer's income in order to have competitive demand.Butter and margarine are examples of substitute goods.The demand for the other affects the price.If there is an increase in the price of butter, demand for margarine will increase, which will ultimately increase the cost of margarine, provided the supply does not change.A decrease in the price of butter will affect the demand for margarine and lead to a fall in its price.
Two or more goods are said to be demanded together in order to provide a level of satisfaction.Cars and fuel are examples.There are two types of goods: perfect and imperfect.The consumer can't do without the other.Cars and fuel are examples.If a substitute is obtained, a consumer can do without the other.A change in the price of a good affects demand for another.There will be a decrease in demand for discs if there is an increase in the price of compact disc players.
The final commodity's demand is said to have derived demand, which is when the demand for a commodity is derived.For the purpose of manufacturing furniture, wood may be demanded.This is where the demand for wood comes from.The demand for wood is derived.
Land, labor, and capital are factors of production.The factors of production used in producing the goods will increase if the demand for a commodity increases.Other things will be the same as the price of the factors of production.
Commodities which have several uses or are demanded for several and different purposes are referred to as component demand.The example above shows how wood is used for furniture.All others will be affected by a change in demand for one of them.If there is an increase in demand for wood, prices will go up.The cost of production of chairs, bed, windows and doors will go up because of the high price of wood.
Excellent explanation and easy to comprehend.It should be used in presentations, seminars and academic lectures.
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