Question

When the Toyota Prius first entered the marketplace, dealers kept waiting lists of people wanting one and the factories had to ramp up production and order more raw materials. Increased factory product indicates derived demand.True / False.

Answer 1

Increased factory product indicates derived demand is True statement.

Explanation:

The dealers kept waiting lists of people wanting Toyota Prius, so ordering more raw materials required to ramp up production is a clear example of derived demand.

Derived demand is an economic term that describes the demand for a certain good or service arising from a demand for similar, necessary goods or services.  

Derived demand represents the association between the demand of customers for the output of a company and the purchase by the company of the required inputs for the production or assembly of that particular output.