Derived demand

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In economics, derived demand is demand for a factor of production or intermediate good that occurs as a result of the demand for another intermediate or final good.^[1] In essence, the demand for, say, a factor of production by a firm is dependent on the demand by consumers for the product produced by the firm. The term was first introduced by Alfred Marshall in his Principles of Economics ^[2] in 1890. Demand for all factors of production is considered as derived demand.^[3]

This is similar to the concept of joint demand or complementary goods, the quantity consumed of one of them depending positively on the quantity of the other consumed. Example if any goods is in production process by demanding capital automatically speed of production will increase that is directly demand or derived demand. ^[1]