Which of the Following Best Illustrates the Concept of Derived

question 22

Multiple Choice

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

• A)The number of retail stores in a downtown area decreases and demand for retail goods increases.
• B)An increase in the number of new single-family homes results from a spurt in the gross national product.
• C)The heat wave results in an increased demand for air conditioners.
• D)Container ship manufacturers experience an increase in sales because more products are demanded from Asia to be sold in the U.S.and must be transported by ship.
• E)Honda's reducing its car prices causes GM to do the same.

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Definitions:

Authorized Stock

The amount of stock that a corporation is authorized to sell as indicated in its charter.

Corporate Charter

A legal document issued by a governmental authority that establishes a corporation and outlines its rights and obligations.

Initial Capital

The amount of money used to start a business or investment.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of shareholders or owners.