Which of the following is an example of a derived demand?
A. Demand for food by consumers
B. Demand for cars by households
C. Demand for labour by firms
D. Demand for entertainment
Answer: Option C
Solution (By JKSSB Mock Tests)
Derived demand is the demand for a factor of production that arises from the demand for the final product it helps produce. Demand for labour is derived from the demand for goods and services.
Explanation:
Classical theory assumes that the economy always tends towards full employment through flexible wages and prices. Underemployment equilibrium and liquidity trap are Keynesian concepts.
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