When the Toyota Prius first entered the marketplace, dealers kept waiting lists of people wanting one and the factories had to ramp up production and order more raw materials. Increased factory product indicates derived demand.
A. True
B. False

The correct answer is A. True.

Explanation:

Derived demand is the demand for goods and services that is generated as a result of the demand for other goods and services. This type of demand usually corresponds to the demand for factors or products, since the demand for a good or service may be related to the process necessary to produce another good or service, although it can affect both producers and consumers.

Derived demand can sometimes lead to an increase in the price of a marginal product, since the demand for the resources needed to produce a physical product also increases.

The elasticity of the demand for a productive factor depends on the characteristics of the good. This dependency is explained through Marshall's laws:

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