4.1.3.6 The interrelationship between markets Flashcards
What is competitive demand?
When two or more goods are substitutes for each other
What is composite demand?
When a good is demanded for two or more distinct uses
What is derived demand?
When the demand for a factor of production, such as crude oil, is derived from the demand of a good, such as petrol
What is joint demand?
goods that tend to be demanded together (i.e. complementary goods)
What is joint supply?
when the production of one good leads to the production of another good
What happens when one of two goods with joint demand has a fall in price?
The other good with joint demand experiences a price increase because the demand curve shifts to the right causing an extension along the supply curve and hence an increase in price
What happens when there is an increase in price of one of two substitutes?
The other substitute will experience an increase in demand, however this drives price up which eventually will result in a new equilibrium price for the substitutes
Why could milk be said to have composite demand?
It can be used for yoghurt, cheese, butter and drinking
Why can cows be said to have joint supply?
They are supplied for both beef and leather
an example of joint demand
cars and fuel. As demand for cars increases, so will demand for fuel
an example of joint supply
the production of leather and beef, both arising from cattle farming
an example of composite demand
crude oil (tires, fuels, kerosine, etc)
an example of derived demand
an increase in the demand for healthcare is likely to lead to an increase in the demand for doctors and nurses
