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 Economics Paper 2, Nov/Dec. 2009
 Questions: 1 2 3 4 5 6 7 8 9 10 11 12 Main
Weakness/Remedies
Strength

Question 4

(a)What is effective demand?

(b)With appropriate examples, explain the following types of  demand

• competitive demand;
• joint demand;
• composite demand;
• derived demand

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Observation

Majority of the candidates who attempted this question performed fairly well.  They demonstrated fairly good knowledge of the concept.  However, most candidates could not give appropriate examples as required in the (b) part of the question.  Candidates who scored low marks did not include some of the following points in their answers.

(a) In Economics, effective demand means desire for a commodity backed by the ability to pay.

(b)i)Competitive demand:  Some goods compete with each other in the sense that they serve the same purpose. Such goods are in competitive demand, for example, tea and coffee, meat and fish.

(ii) Joint demand: Sometimes, two goods have to be necessarily used together.  Such goods are in complementary or joint demand.  For example, car and petrol, needle and thread, etc.
(iii)  Composite demand: Sometimes the total demand for a commodity is made up of demand for separate uses.  For example, the total demand for rubber is made up of the separate demands for making shoes, belts, raincoats, etc.  Hence, the overall demand for rubber is a composite of the demands for these separate uses.

(iv) Derived demand: Some goods are demanded not for their own sake but to be used for the production of other goods and services.  For example, labour is demanded because it helps to produce other goods and services.  Or derived demand means the demand for a factor of production which is derived from the demand for the good or service that it helps to produce.