Changes in a particular market are likely to affect other markets
Markets are connected. A change in price or supply in one market can shift demand or supply in another market entirely.
Real World
When Russia's invasion of Ukraine in 2022 drove natural gas prices to record highs, demand for heat pumps and home insulation surged — a supply shock in one market directly shifting demand in completely separate markets.
Exam Focus
Use a chain-of-reasoning format: state the change, identify the linked market, then explain whether demand or supply shifts and why.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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