An increase in the global demand for electric vehicles (EVs) leads to an expansion in the production of EV batteries, which in turn increases the demand for lithium (a key raw material). At the same time, consumers increasingly view hydrogen fuel-cell vehicles as a viable alternative to EVs.
Which of the following correctly describes the economic relationships between these markets?
The demand for lithium is derived demand, and the relationship between electric vehicles and hydrogen fuel-cell vehicles is competitive demand.
The demand for lithium is joint demand, and the relationship between electric vehicles and hydrogen fuel-cell vehicles is composite demand.
The demand for lithium is composite demand, and the relationship between electric vehicles and hydrogen fuel-cell vehicles is joint demand.
The demand for lithium is derived demand, and the relationship between electric vehicles and hydrogen fuel-cell vehicles is joint demand.
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.