Interrelationships between markets

Question 1

describe demand for complement goods

Answer 1

• products that are usually used together, where an increase in the demand for one leads to an increase in the demand for the other
  = goods are in joint demand
  = printer and ink
• increase in price of one good like printer will decrease demand for ink

Question 2

describe competitive demand

Answer 2

• occurs when customers can choose from alternative services or products (substitutes)
  = coke and pepsi
• increase in price of coke causes contraction of demand for coke= increase demand for Pepsi @ same price

Question 3

describe derived demand

Answer 3

• demand for a good or service that arises from the demand for another related good or service
  = cars and aluminium or demand of good and labour
• increase in demand for car means demand of aluminium shifts outward

Question 4

describe composite demand

Answer 4

• an increase in demand for one use of the good can lead to a decrease in the availability of that good for other uses
• if the demand for milk for cheese production increases, there may be less milk available for butter production
• where 2 goods require the same inout to make them
  = increase production of one good decreases supply of the other good
  = reduces the input available to make the other good