Which of the following is a factor that increases the volatility of demand in industrial markets?

• A. Consistent input prices
• B. Stable government regulations
• C. Derived demand from consumer markets
• D. Uniform product quality across suppliers

Answer: (C)

Verified step by step guidance

1. Understand the concept of demand volatility: Demand volatility refers to how much and how quickly the quantity demanded changes in response to various factors.
2. Recognize that in industrial markets, demand is often 'derived demand,' meaning it depends on the demand for consumer goods that use the industrial products as inputs.
3. Analyze how derived demand can cause volatility: If consumer demand fluctuates, the demand for industrial inputs will also fluctuate, often amplifying the changes in demand in industrial markets.
4. Compare other options: Consistent input prices and stable government regulations tend to reduce uncertainty and thus decrease demand volatility, while uniform product quality does not directly affect demand fluctuations.
5. Conclude that derived demand from consumer markets is a key factor increasing demand volatility in industrial markets because it links industrial demand directly to the often more variable consumer demand.