Derived Demand

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Definition: Derived Demand

It can be defined as the demand of a good/ service which is dependent on the demand of some other good/service. In this case, the demand of one article is derived from the demand of some other article.

This concept of economics helps in understanding and predicting demand. This also helps marketers to understand the relation between two goods and predicting demand.

For example: The concept is applicable to both goods and services. The demand of coal would have increased due to introduction of coal engines. Another example of derived demand in services is demand for transportation. This is so because with increase in industrialisation transportation demand will increase.

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