Which of the following is not an example of derived demand?

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BlackTom AI · Accepted Answer

Question restatement: Which of the following is not an example of derived demand?

Option a: a. An increase in demand for toys results in an increase in demand for plastic.
- Analysis: This is a classic example of derived demand. Toys require plastic as an input, so higher demand for toys increases demand for plastic used to produce them. The link is through the final good (toys) driving demand for an input (plastic).

Option b: b. A decrease in the price of iPads causes an increase in the quantity of iPads demanded.
- Analysis: This describes a movement along the individual product’s own demand curve due to a price change, not a demand for an input or factor driven by the demand for a final good. It is about price elasticity and quantity demanded, not about inputs used to produce something else. Therefore, it is not an example of derived demand.

Option c: c. A decrease in demand for motorbikes results in a decrease in demand for motorbike tyres.
- Analysis: This demonstrates derived demand. If fewer motorbikes are demanded, there is less need for tyres, which are an input used in producing motorbikes. The demand for tyres is derived from the demand for motorbikes.

Option d: d. An increase in the demand for houses results in an increase in demand for house roof tiles.
- Analysis: This is another clear case of derived demand. When demand for houses rises, builders and homeowners buy more roof tiles, an input used in the construction of houses.

Summary of reasoning: Options a, c, and d illustrate derived demand, where the demand for inputs (plastic, tyres, roof tiles) is driven by changes in demand for a final good or service (toys, motorbikes, houses). Option b describes a change in quantity demanded for the final product itself due to a price change, which is not about input demand or derived demand.

MUF0061 Economics Unit 1 - Semester 2, 2025

Which of the following is not an example of derived demand?

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