The Term "Derived Demand" Refers to the Idea That a Change

question 2

Multiple Choice

The term "derived demand" refers to the idea that a change in the

• A)demand for one good, say, tennis racquets, will affect the demand for related goods, say, tennis balls.
• B)demand for a good is affected by the supply of that good.
• C)demand for a good will affect the demand for the factors used to produce that good.
• D)supply of a factor will affect the demand for that factor.

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Definitions:

Total Cost Concept

A concept used in applying the cost-plus approach to product pricing in which all the costs of manufacturing the product plus the selling and administrative expenses are included in the cost amount to which the markup is added.

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and overhead costs.

Administrative Expenses

Costs associated with the general management and administration of a business, such as salaries of executive personnel, legal and accounting fees.

Operating Capacity

The maximum output that a company can produce under normal conditions over a specific period.