Interrelationships between markets

• what does a competitive market operate through ?

  interactions of different types of supply and demand
• how does change for demand for goods and services affect other markets ?

  firms move away from markets where demand has fallen and into others that have a rise in demand = increase in supply as firms move into new markets = more competition
• what is derived demand?

  when the demand for one good is linked to the demand of a related good as it comes from it e.g demand for bricks is derived demand for building houses
• what is composite demand?

  when the good demanded has more than one use

  • e.g milk
  • increase in demand for cheese = more cheese supplied
  • but less butter can be supplied
  • = increase in price of milk as there are competing uses
• what is joint supply?

  the production of one product creates a by-product which can also be supplied

  • e.g increase production of lamb = increased production of wool
  • = decrease in price for both products
• what is joint demand?

  this is when good are bought together

  • e.g increased demand for digital camera = increased demand for memory cards
• how does demand for substitute goods be affected?

  • if price of original good increases , the demand for substitute good will increase
  • if price of original good decreases , the demand for substitute good decreases