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Explain What Is Meant by "Derived Demand" as It Relates

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Essay

Explain what is meant by "derived demand" as it relates to factors of production.


Definitions:

Equilibrium Value

The price at which the quantity of goods supplied is equal to the quantity of goods demanded in a market.

Factor Of Production

Inputs employed in the production of goods and services, typically classified as land, labor, capital, and occasionally entrepreneurship.

Average Product

The output per unit of input, such as labor or capital, used in the production process.

Marginal Productivity Theory

A principle in economics that suggests that the addition of a unit of labor or capital leads to a change in output, essentially quantifying the extra output produced by adding one more unit of a resource.

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