Joint demand and alternative demand

Joint demand means two or more goods are demanded together. To consume one good, you need another good. In other words they are complements. For example, if the demand for tea increases, the demand for sugar will also increase. Here tea and sugar are complements.

Another good example of joint demand is, printers and ink cartridges. You might have noticed that some models of printers with very high functionality are sold at a very cheap price. You may think that the printers are of lower quality or produced with cheap labour. In fact, it may not be the case. Those printers are usually sold at a loss. The profit is made from the sale of ink that has to be used with the printer. The cheap price of the printer is a lure for people to buy the printer.

Alternative demand: Alternative demand is derived from the changes in the price of substitutes. When the price of a good goes down, people who have been using other goods with similar or exact same use (substitutes) may move to buying that particular good. In this case, the demand came from people who had been using alternative goods. This will also happen if the price of substitute goods increases.

Price of substitute goods is a determinant of demand.

Students may get confused between the concept of derived demand and joint demand. Watch this video to get a good explanation.

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