Interrelated goods and markets
Joint demand refers to demand for goods which are complementary to each other. In other words demand for one good or service is not done in isolation, but takes into account that other goods or services are essential for the utility of the good to the consumer. For example, the purchase of a ticket to a football match in another city is also likely to require the purchase of a train, air or bus ticket. Goods which are jointly demanded are called complementary goods.
Composite demand refers to goods, services or commodities which have several different uses. The concept is more significant when considering demand for global commodities with multiple uses. For example, metals such as copper, tin and zinc have several different uses. This means that changes in demand for one use, such as for major construction projects in China, will put upward pressure on global prices of these metals. This in turn reduces availability for other uses, such as for motor manufacturing, as well as drive up commodity prices and production costs.
Derived demand refers to a situation where the demand for one resource creates demand for another one. For example, the demand for diamonds is derived largely from the demand for jewellery. The demand for labour is derived from the demand for goods and services they labour produces. This has a significant bearing on the wage rate of labour, which to a large extent depends upon the value of the goods and services labour produces.
Competitive demand refers to the demand for products which have close substitutes. The extent of competitive demand can affect both the own price elasticity of demand and cross price elasticity of demand between the two products. Joint supply
Goods in joint supply are those whose supply depends upon the supply of another good or service. Various chemicals are a by-product of oil refining, so that when more petroleum is produced the supply of these by-products increases. Just under 50% of oil goes to make petroleum, with the rest being used to produce a vast array of goods, from plastics to paints and cosmetics. This means that the prices of plastics and paints can be affected by the supply of petroleum, so that an increase in supply is likely to see a fall in the price of plastics and paints.
Competitive supply is a term used to describe a situation where more than one product can be produced from the same factors of production. For example, a farmer could use his land and labour to produce two different crops – in producing one crop, the factors used cannot then be used to produce the other crop.