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Question

Difficulty: HardTypes of Demand

Match each economic market scenario on the left with its corresponding type of demand classification on the right.

  • The demand for petroleum engineers arising directly from an increase in crude oil exploration activity.Derived Demand
  • The total market demand for palm oil, which is required for culinary cooking, soap manufacturing, and industrial biofuel production.Composite Demand
  • The demand for palm kernel oil relative to coconut oil as alternative input choices for detergent manufacturers.Competitive Demand
  • The demand for smartphones and SIM cards, where both commodities must be consumed together to access mobile telecommunication services.Joint (Complementary) Demand

Answer

Petroleum engineers demand matches Derived Demand; Palm oil total demand matches Composite Demand; Palm kernel oil vs coconut oil demand matches Competitive Demand; Smartphones and SIM cards demand matches Joint (Complementary) Demand.
Each scenario accurately exemplifies a fundamental demand type: demand for factor labor derived from output represents derived demand; a single good serving cooking, soap, and biofuel uses represents composite demand; substitute industrial oils represent competitive demand; and goods required concurrently represent joint demand.

Step-by-Step Solution

1
Analyze the petroleum engineers scenario
Classification: Derived Demand
Demand for a factor of production (labor) depends directly on the demand for the final output or economic activity it helps produce.
2
Analyze the multi-use palm oil scenario
Classification: Composite Demand
Composite demand occurs when a single commodity has multiple applications, causing total demand to be the aggregate of all these separate uses.
3
Analyze the palm kernel oil versus coconut oil scenario
Classification: Competitive Demand
Goods that serve as viable substitutes for each other exist in competitive demand, where an increase in demand for one reduces demand for the other.
4
Analyze the smartphones and SIM cards scenario
Classification: Joint (Complementary) Demand
Complementary products that are consumed together to satisfy a single consumer want demonstrate joint demand.

Key Concept

Classifications of Interrelated Demand
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Topics

Types of Demand

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