14) supply and demand

Question 1

What is composite demand and derived demand with examples

Answer 1

Composite- demand for a good with multiple uses ie oil

derived demand- demand for a good for the use of producing something else ie labour

Question 2

Causes of shifts in demand?

Answer 2

-changes in tastes and preferences for goods
-changes in income (depends on normal good v inferior good)
-

Question 3

What is composite supply and competitive supply?

Answer 3

Composite=where demand for a product can be satisfied by the supply of two or more goods that are substitutes for each other ie people switch to relatively cheaper substitute and one business may supply both

competitive=when two or more alternative goods can be supplied by the same inputs of factors of production

Question 4

Factors causing a shift in supply

Answer 4

• changes in the cost of production ie tax and subisdy
• improvements in technology
• changes in the productivity of FOP
• regulation
• number of suppliers
• changes in the price of other goods