Interrelationships between markets

• What is joint demand?

  • When consumers use two products together, also known as complementary goods
  • The change in price of one good impacts the demand for the other good 
  • e.g
  • Coffee and sugar
  • Cereal and milk
  • Smart phones and mobile apps 
• What is competitive demand?

  • Two goods are used for the same purpose, also known as substitute goods
  • The change in price of one good impacts the demand for the other good 
  • e.g
  • Cinema tickets and online streaming services
  • Tea and coffee
  • E-books and printed books
• What is composite demand?

  • Two or more goods require the same input to make them
  • An increase in production of one good could lead to a decrease in supply of another good, as less of the input is available 

  e.g

  • Cheese and yogurt require the same input (milk)
  • Growing crops or raising livestock requires the same input (land)
• What is derived demand?

  • Demand for a good or service arises from the demand for another good or service 
  • The demand for inputs is derived from the demand for the final product
  • e.g
  • Aluminium and cars
  • Labour and goods & services 
• What is joint supply?

  • The supply of two different goods stems from the same source
  • The increase in production of one good will increase the production of another good.
  • The second good may be a by-product of the first good
  • e.g
  • Beef and cow leather
  • Poultry meat and feathers 
  • Honey and beeswax