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What is an example of derived demand?

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Quick Answer

One example of derived demand is the consumer request for crude oil derived from the consumer need for gasoline. Derived demand refers to the consumer's need for a certain product of which another product is made.

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Full Answer

Another example is how the demand for designer clothing creates a derived demand for fabrics and textiles. Economists use the derived demand theory to predict what materials will go up in price in accordance with whatever consumer product goes up in demand. For example, if the demand for leather belts rises, the cattle handlers who sell the cowhides to the leather suppliers can plan for an increased derived demand for their product.

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