4.1.3.6 the interrelationship between markets

Question 1

changes in one market are likely to affect other markets
what does this relate to?

Answer 1

relates to the types of demand and supply and how they link different markets

Question 2

what is derived demand?

Answer 2

when demand for 1 good is linked to D for a related good
eg) D for bricks is derived from the D for the building of new houses

demand for labour is derived form the goods the labour produces
eg) if D for cars increases, the D for the labour to produce those cars will increase

Question 3

what is composite demand?

Answer 3

when the good demanded has more than one use

eg) milk
- assuming there’s a fixed supply of milk, an increase in the D for cheese will mean more cheese is supplied and therefore less butter can be supplied

Question 4

what is joint demand?

Answer 4

when goods are bought together

eg) digital camera and a memory card
-> increase in D for digital cameras is likely to lead to an increase in D for memory cards

• demanding sub goods would reduce the QS and reduce their price
  eg2) samsung tvs over panasonic tvs
  -> reduces QS of panasonic tvs and decreases their price

Question 5

what is joint supply?

Answer 5

when increasing supply of one good causes an increase or decrease in the supply of another good

eg) producing more lamb will increase the supply of wool