microecon. interr==

• define complements 


  -this is when goods are in joint demand so are often used together

  -for instance printers and printer ink

  -when there is an increase in the price of printers from p1-p2, there is a contraction in demand for printers

  -meaning that there will be an inward shift in the demand for printer ink at the same price as less people are willing and able to buy it so there is a reduction in demand from q1-q2

  
• define substitutes 


  -2 alternative goods that could be used for the same purpose and are in competitive demand

  -for instance Pepsi and Coke

  -a rise in the price of Coke will lead to a contraction in demand for Coke

  -this shifts demand for pepsi to the right as more people are willing and able to buy Pepsi at the same price

  
• define derived demand 


  -also known as input demand is demand for a good/factor of production resulting from the demand for an immediate good/service

  -for instance cars and aluminum

  -when there is an increase in the demand for cars, there will be an increase in the demand for aluminum

  -when the demand for the good that requires the input good increases, the demand for the input good also increases

  
• define composite demand 


  -2 goods require the same input in order to be made

  —for instance cheese and butter

  -when the demand for cheese rises, the price will rise and quantity meaning more cheese is produced using more milk so less milk is used for butter so the supply for butter decreases

  
• define joint supply


  -2 goods are produces together from the same origin/raw material so an increase/decrease in the demand for one good will lead to an increase/decrease in the supply for the other

  -for instance honey and beeswax or leather and beef

  -an increase in the demand for honey will lead to an increase in production of honey

  -so there will be an outward shift in the supply for beeswax as it is a by-product of honey