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Explain what is meant by "derived demand" as it relates to factors of production.

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Derived demand is the demand for a factor of production that comes about because of demand for the thing that is made from that factor of production.  The factor of production is not demanded for its own sake, but because it is necessary for the production or distribution of the product that is demanded.  Let us look at a couple of examples.

First, we can look at the demand...

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