Economics A-Level
Derived demand
What Derived demand means in Economics A-Level, as defined for AQA.
Definitions of Derived demand
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Reference: AQA
Firms only hire workers if the revenue generated by an additional worker exceeds their wage, so labour is demanded for the revenue it generates.
Labour demand is derived because the primary cause of a shift is a change in the demand for the final product.
Demand for the factors of production used to make a product, affected by changes in that product market.
The demand for a factor of production resulting from the demand for the final good it produces.
Happens when a factor is needed to produce something else, such as steel for cars.
Topics that use Derived demand
- The demand for labour, marginal productivity theory (AQA A-Level)
- The interrelationship between markets (AQA A-Level)
Related terms
- Competitive demand
- Composite demand
- Demand curve for labour
- Factor markets
- Joint demand
- Law of diminishing returns
- Marginal revenue product
- Profit maximisation
Using Derived demand in the exam
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