Transportation Operations LINCS Practice Exam

Transportation is what kind of demand?

1. Direct

2. Consumer

3. Derived

4. Corporate

The correct answer is: Derived

Transportation is considered derived demand because it is not demanded for its own sake but rather as a result of the need to move goods and services. In economic terms, derived demand refers to the demand for a factor of production or a service that arises from the demand for another product or service. In this context, the need for transportation services is driven by the necessity to transport goods to market, provide services to customers, or facilitate the movement of people. For example, if there is an increase in the production of goods, this might lead to higher demand for transportation services to deliver those goods to consumers. Thus, the transportation sector experiences demand that is contingent upon the levels of production and consumption in other areas of the economy. This interplay reflects how transportation fundamentally supports and facilitates broader economic activities, making it a classic case of derived demand.