Paula has developed a successful business selling appliances to homebuilders. She carefully monitors the issuance of new home permits to anticipate how many appliances she will need to buy in order to supply her customers. Paula is concerned with demand. A) modifiedB) secondaryC) rebutD) derivedE) delayed

D) derived

Explanation:

Derived demand is the demand that arises due to an increase in the demand for a related product or service. If two products are used together, an increase in the demand for one causes the demand for the other to rise. For example,  if many people buy cars, the demand for fuel will increase.

Paula is concerned with derived demand. The new building permits signifies an increase in demand for new homes.  An increase in the demand for new homes will increase the demand for appliances. Demand is described as derived if it only results from an increase in the demand for the related product.