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Demand for the following goods and services are increasing rapidly. In each case, list two...

Question:

Demand for the following goods and services are increasing rapidly. In each case, list two derived demands that you predict will be increasing as a result.

1. Demand for natural gas.

2. Demand for medical services.

3. Demand for international travel.

4. Demand for video games.

Derived Demand Examples:

Derived demands are the demands resulting from the demand of related goods or intermediate/final goods. If the demand of a final good decreases, then the demand for one of the factors of production for that good will also decrease.

Answer and Explanation:

1. Demand for natural gas.

As the demand for natural gas grows, both the demand for geologists and drilling machines will grow. Geologists will increase in demand because firm will seek to find more natural gas to satisfy the needs of consumers and geologists are crucial in that search. Drilling machines will also increase in demand because firms will likely try to drill more which means they needs more of these machines and thus the demand for them increases too.

2.Demand for medical services.

Both the demand for doctors as well as the demand for MRI machines. Doctors are necessary for any scale of medical services and if the demand for medical services rises then the demand for doctors must also rise. MRI machines are one the most basic machines in any hospital and are needed to diagnose patients. Thus because it is such a fundamental part of medical services the demand for medical services increasing will increase the demand of MRI machines.

3.Demand for international travel.

Both the demand for airplanes and suitcases will rise. First, international travel for tourism at least is almost completely dominated by airplanes and thus the demand for airplanes must rise. Secondly people need suitcases to pack their clothing and stuff when traveling which means the demand for them will also increase.

4. Demand for video games.

The demand for video game developers and graphics cards will rise. The video game developers are a necessary input to produce video games and thus the demand for them will rise. Graphics cards are necessary for consumers to play video games on their computer and thus thy are complement goods. This means that if the demand for on rises, the demand for the other will also rise.


Learn more about this topic:

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The Market Demand Curve: Definition, Equation & Examples

from Introduction to Macroeconomics: Help and Review

Chapter 7 / Lesson 11
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