In regions like Inner Mongolia and Western Australia, the extraction of neodymium—a rare earth element—is expanding at an unprecedented rate. This growth is propelled by international decarbonisation targets and the rapid construction of utility-scale offshore wind turbines. Neodymium is a vital component in the high-strength permanent magnets required for modern direct-drive wind generators. Consequently, neodymium is a material experiencing rapid derived demand. As nations accelerate their transition to renewable energy grids, developer demand for these highly efficient offshore turbines has skyrocketed. In response, turbine manufacturers have dramatically ramped up procurement, triggering a sharp surge in the global demand for raw neodymium. Because primary extraction projects take years to commission, global supply cannot quickly adjust, resulting in severe price volatility and strategic stockpiling by major economies.
Define the term 'derived demand' (Extract Z, line 5).
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.