The rapid deployment of next-generation telecommunications infrastructure, specifically 5G and emerging 6G networks, has significantly disrupted global rare-metal markets. High-frequency communication hardware requires specialised semiconductor chips made from gallium arsenide (GaAs) and gallium nitride (GaN) rather than traditional silicon, owing to their superior power efficiency and thermal conductivity at high frequencies.
This surging demand for telecom infrastructure highlights the concept of derived demand. Gallium is not purchased directly by mobile network subscribers or end-users. Instead, it is demanded by semiconductor fabrication plants to manufacture high-frequency power amplifiers and radio-frequency front-end modules. These components are, in turn, integrated into telecom base stations and consumer smartphones. Consequently, as global demand for high-speed connectivity and network infrastructure accelerates, the demand for raw, high-purity gallium shifts outwards, resulting in substantial price volatility in global metal exchanges.
Define the term 'derived demand' (Extract Z, paragraph 2).
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.