what is difference between “derived demand” and “inelastic demand”?
The difference between “derived demand” and “inelastic demand” is that the former tends to increase in price as the demand increases while the latter has no increase in demand of a product even when there is increase/decrease in prices. -quote- “Derived demand is a term in economics, where demand for one good or service occurs as a result of demand for another. This may occur as the former is a part of production of the second. For example, demand for coal leads to derived demand for mining, as coal must be mined for coal to be consumed. As the demand for coal increases, so does its price. The increase in price leads to a higher demand for the resources involved in mining coal. And therefore: MRP = MPP * P Where MRP is the marginal revenue product, MPP is the marginal physical product, and P is the price of the physical product. Inelastic demand Situation where the demand for a product does not increase or decrease correspondingly with a fall or rise in its price.
