Derived Demand
Definition
Derived demand refers to the demand for a good or service that arises from the demand for another good or service. It occurs when one product's demand depends on the demand for another product used in its production.
Analogy
Imagine you're running a lemonade stand. The amount of lemons you need depends on how much lemonade you plan to sell. So, your demand for lemons is derived from your customers' demand for lemonade.
Related terms
Complementary Goods: Complementary goods are products that are consumed together because they enhance each other's value.
Substitute Goods: Substitute goods are products that can be used as alternatives to each other.
Joint Demand: Joint demand refers to the demand for two or more goods that are used together in a particular way.
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