Practise IB Economics HL 2.2.5 by analysing how supply shocks and policy changes transmit across related markets.
Note that widgets and pidgets are imaginary products.
In the country of Burbia, the demand and supply of widgets are given by the functions
where Qd is the quantity demanded per month, Qs is the quantity supplied per month and P is the price per widget in dollars ($).
Two products are in competitive supply. Using an example, outline how the supply for one of them is likely to be affected by an increase in the price of the other.
Level
Marks
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The work does not meet a standard described by the descriptors below.
1
Vague response.
The idea that an increase in the price of one will lead to a decrease in supply of the other.
2
Accurate response.
An increase in the price of one good, eg wheat, will cause a decrease in supply of the other eg barley as the two products "compete" for resources needed to grow them.