Is it true that the derived-factor demand concept apply to producers and consumers? Why or why not?
1 Answer
Derived demand concept applies to producers and not to consumers.
Explanation:
Demand for a product or factor is said to be a derived demand when its demand is derived from the demand for a product in the production of which it is employed.
Demand for a factor is not direct. It is indirect. A producer demands it not for his personal consumption. He knows that he can use the factor in the production of a good. That good enjoys a good demand in the market. The demand for the factor is derived through the demand for the good.
A consumer's demand for a good is direct. He demands it to satisfy his want. It directly satisfies his want.
Good having derived demand indirectly satisfies a consumer want.
Good having driect demand directly satisfies a consumer want
