Elaborate cross demand, composite demand and derived demand and cite an example to enumerate these types of demand.
Question: Elaborate cross demand, composite demand and derived demand and cite an example to enumerate these types of demand.
Cross demand refers to the relationship between the demand for one good and the price of another good. For example, if the price of coffee increases, the demand for tea may increase as coffee drinkers switch to a substitute beverage.
Composite demand refers to a situation where a good is demanded for multiple uses or purposes. For example, steel can be used for both construction and manufacturing, so the demand for steel is influenced by both industries.
Derived demand refers to the demand for a good or service that is a result of the demand for another good or service. For example, the demand for labor in the construction industry is derived from the demand for new buildings.
In summary, cross demand involves the relationship between two goods' prices, composite demand involves a good being demanded for multiple uses, and derived demand involves a good or service's demand being dependent on another good or service's demand.
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