Chapter 13, Problem 1Q

Describe the difference between independent and dependent demand and give an example of each for a pizza restaurant such as Domino’s or Pizza Hut.

Summary Introduction

To draw: To distinguish between independent and dependent demand with pizza restaurant examples

Introduction

Demand is an economic concept that describes the consumer’s wants and needs to buy goods and services with the willingness to pay. The quantity demanded and the price is related to each other. There are many factors like taste & preference, income level, the expectation of the customer, and prices of related products that have an impact on demand.

Explanation of Solution

Independent demand is a form of demand for a finished good like a pizza, bicycle, and TV.

Dependent demand is a type of demand in which components or some parts for making a finished product are demanded like cheese for making pizza and tyres for fixing in cars.

The difference between independent and dependent demand is:

1. 1. Independent demand does not focus on or have no concern for the demand for other items.

      Dependent demand arrives from the independent demand.

1. 2. Independent demand is very essential, but can’t be computed.

      Dependent demand is computed from the demand for the finished product.

Example: Domino’s pizza is a finished product and can be directly consumed by the consumer and comes under independent demand.

Cheese and Sauces are materials for making pizza and it comes under the dependent demand.