Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Quantity supplied
B
Consumer preferences
C
Market equilibrium
D
Total revenue
Understanding the Answer
Let's break down why this is correct
Answer
Marginal analysis helps businesses decide the best price for their products by looking at the additional benefits of selling one more unit compared to the costs involved. Similarly, derived demand refers to how the demand for one good is influenced by the demand for another good. For example, if more people want to buy cars, there will be a higher demand for steel, which is used to make cars. This means that the demand for steel is derived from the demand for cars. So, just as marginal analysis helps set prices, derived demand shows how one market affects another.
Detailed Explanation
Derived demand means that the demand for one thing depends on the demand for another. Other options are incorrect because Some might think derived demand is about how much is made; People might confuse derived demand with what consumers like.
Key Concepts
Marginal analysis
Derived demand
Price determination
Topic
Explaining Economic Changes
Difficulty
hard level question
Cognitive Level
understand
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