Question

Identify & explain the concept from the given illustration.

Aman purchased sewing machines and furniture for his tailoring shop.

Answer 1

Concept: Indirect/Derived demand

Explanation:

Indirect or derived demand refers to the demand for goods that are not meant for direct consumption but are used in the production of other goods and services. Such goods are called producer’s goods.

In this case, Aman purchased sewing machines and furniture to use in his tailoring shop for producing clothes. The demand for these goods arises because of the demand for stitched clothes (the final product). Hence, this illustration relates to the concept of indirect or derived demand.