Interrelated markets

Question 1

What does related goods mean?

Answer 1

changes in market conditions for one product can have significant effects on the demand or supply in other markets

Question 2

What is derived demand?

Answer 2

the demand for products/resources due to changes in demand for goods/services (e.g., bricks and houses)

Question 3

What is joint demand?

Answer 3

the purchasing of one good at the same time as purchasing another good (e.g., buying a cinema ticket but also having to buy transport to the cinema) - also known as complementary goods

Question 4

What is the cross elasticity of demand between complementary goods?

Answer 4

negative - a fall in the price for X results in an increase in demand for Y

Question 5

What is competitive/substitute demand?

Answer 5

the purchase of one product leads to a reduction in demand for an alternative product - these goods are also referred to as substitute goods

Question 6

What is the cross elasticity of demand between substitute goods?

Answer 6

positive - a fall in price of one brand results in the fall of demand for another brand

Question 7

What is composite demand?

Answer 7

alternative uses of a single resource (e.g., if sugar is used to make ice cream, there is less available to make chocolate)

Question 8

For composite demand, an increase in demand for one good…

Answer 8

…leads to a fall in the supply available for another good

Question 9

What is joint supply?

Answer 9

when the production and supply of one good leads to the production and supply of another good (by-product) - e.g., beef and leather, or sheep and wool

Question 10

What is joint supply?

Answer 10

when the production and supply of one good leads to the production and supply of another good (by-product) - e.g., beef and leather, or sheep and wool