Why demand for transport is a derived demand

Well, first of all:

Derived demand - demand for a good or service not for its own sake, but for what it produces.

In case of transport we can see 2 types of derived demand for transport:

1st is passenger demand, usually we need transportation to our workplaces, shops, schools, red bull factories etc. we need no ride on bus\car\train\whatever itself but we need to be somewhere. this is the final product of transport - getting somewhere you need to get.

2nd is freight transport demand. The companies usually transport all sorts of goods around the world not because they like how lots of boxes with Red Bull cans look in the vehicles\huge containers, but because their consumers want to get it. Or somebody needs raw materials to produce their good, let's say, books. Transportation itself is not doing anything to the product, but eventually the raw materials get from A to B - and that is what demanded, that is what the final product of transport.


chris sivewright said...

Passenger demand:

a. those travelling for leisure
b. those travelling to work

Mary said...

red bull factory - leisure
offices - work :D

chris sivewright said...

I thought people who drank Red Bull, had wings - and thus environmentally friendly.

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