Which of the Following Best Illustrates the Concept of "Derived

question 137

Multiple Choice

Which of the following best illustrates the concept of "derived demand"?

• A) A decrease in the price of glass causes the demand for plastic to decrease.
• B) An increase in the demand for bread leads to an increase in the demand for flour.
• C) A decrease in the price of air travel leads to an increase in the quantity demanded of air travel.
• D) An increase in the demand for peanut butter leads to an increase in the demand for jelly.

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Definitions:

Straight Line Pay

A method of compensation that is consistent and unchanging over a period, contrary to performance-based pay.

Performance Incentive

A reward system designed to encourage workers to achieve specific performance targets.

Perverse Incentive

A perverse incentive is an incentive that has an unintended and undesirable result that is contrary to the interests of the incentive makers.

Budget-gaming Problem

A situation in budgeting where individuals or departments manipulate figures or withhold information to secure budgetary advantages.