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Difficulty: EasyTypes of Demand

Electricity is used simultaneously for home lighting, cooking, powering factory machines, and operating electric trains. Which type of demand does electricity exhibit?

  1. Composite demandAnswer
  2. B
    Joint demand
  3. C
    Derived demand
  4. D
    Competitive demand

Answer

Composite demand
Composite demand refers to the demand for a single commodity that has several alternative uses. Because electricity is required for domestic lighting, cooking, industrial machinery, and transport, its overall demand is composite.

Step-by-Step Solution

1
Examine the usage scenario of electricity given in the question.
Electricity is required to fulfill several distinct functions: domestic lighting, cooking, powering industrial equipment, and transportation.
Understanding how the product is utilized across different activities helps determine its demand classification.
2
Match the multi-use characteristic to the standard economic definition of demand types.
When a single item is demanded for multiple alternative uses, its aggregate demand is classified as composite demand.
By definition, composite demand represents the total demand for a good that serves several separate purposes.

Key Concept

Types of Demand - Composite Demand
Estimated Time:45s
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Types of Demand

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