Syllabus: AQA - GCSE Economics
Module: 3.1.3 How prices are Determined
Lesson: 3.1.3.4 Intermarket Relationships

Introduction

This lesson aligns directly with section 3.1.3.4 Intermarket Relationships from the AQA GCSE Economics (8136) specification. It explores how shifts in one market can affect others, a crucial idea for understanding real-world economics. Intermarket relationships help students see how prices ripple across the economy, providing insight into complex but relatable concepts such as fuel affecting food prices or labour shortages influencing multiple industries.

Understanding these connections isn’t just exam-relevant—it’s foundational for commercial awareness and workplace readiness. This topic offers a rich opportunity to embed Gatsby Benchmark 4 by linking curriculum content to career implications, particularly in sectors affected by supply chains and pricing dynamics.

Key Concepts

Students should be able to:

• Understand that a change in supply or demand in one market can affect prices and quantities in related markets.

• Explain the concept of complementary goods (e.g., cars and fuel) and substitute goods (e.g., butter and margarine).

• Analyse how price changes in one market can impact the supply or demand in another, often through shared production inputs or consumer preferences.

• Illustrate intermarket relationships using demand and supply diagrams.

• Apply chain of reasoning when explaining these relationships in exam contexts.

The AQA syllabus expects pupils to use economic models to interpret market interactions and to make connections between seemingly unrelated industries—an ideal setup for cross-disciplinary thinking.

Real-World Relevance

Recent global events provide tangible case studies for this topic:

• Ukraine War and Global Wheat Prices: Disruption in wheat supply increased global prices, which then impacted the price of substitute goods like rice and corn. Additionally, higher input costs (e.g., fertiliser, fuel) triggered price rises across multiple food markets.

• Petrol Price Rises: As petrol becomes more expensive, demand for fuel-efficient cars rises. This affects car manufacturers, oil suppliers, and even public transport usage—showcasing classic intermarket effects between complementary and substitute goods.

• Tech Sector and Semiconductor Shortages: Limited supply of semiconductors caused ripple effects across electronics, automotive, and appliance markets, raising prices and slowing production.

Teachers can deepen learning by encouraging students to track live news stories that illustrate these principles in action.

How It’s Assessed

Assessment of this topic typically appears in Paper 1: How Markets Work and may include:

• Multiple-choice questions testing understanding of definitions (e.g., complements and substitutes).

• Diagram-based short questions requiring interpretation of supply and demand changes.

• 4- and 6-mark questions asking for explanations of intermarket effects using examples.

• 9-mark questions often demand chain of reasoning with applied examples.

Command words include:

• Explain – give reasons with logic

• Analyse – break down effects and link causes

• Draw – supply/demand diagrams

• Evaluate – assess impacts of changes in different markets

Students should practise building well-structured answers using diagrams, examples, and economic terminology.

Enterprise Skills Integration

This topic supports the development of key enterprise skills, particularly in:

• Decision-Making & Problem-Solving: Analysing how decisions in one market affect others trains students in evidence-based reasoning and scenario thinking.

• Commercial Awareness: Students gain insight into how organisations must respond strategically to market signals, input price shifts, and consumer behaviour changes.

• Cross-Curricular Thinking: This topic integrates maths (graph analysis), geography (global supply chains), and business studies (cost and price relationships).

Enterprise Skills simulations allow students to roleplay decisions in interconnected markets—e.g., adjusting supply chains or reacting to competitor pricing—giving abstract concepts real-world urgency.

Careers Links

Teaching this topic supports Gatsby Benchmarks 4, 5, and 6 by embedding careers awareness into the curriculum:

• Benchmark 4 (Curriculum to Careers): Explores roles such as supply chain analyst, economist, financial planner, and procurement officer, all of whom deal with intermarket decisions.

• Benchmark 5 (Employer Encounters): Use case studies or video interviews with industry professionals impacted by shifting markets (e.g., energy, retail, logistics).

• Benchmark 6 (Workplace Experiences): Simulated pricing scenarios help replicate decision-making environments from real jobs.

Skills learned here are valued across sectors: students gain the capacity to anticipate change and respond strategically—a vital workplace competency.

Teaching Notes

Common Pitfalls:

• Students often confuse complementary and substitute goods—revisiting relatable examples (e.g., burgers and buns vs. Pepsi and Coke) helps.

• Some struggle to apply diagrams to chain reactions across markets. Use scaffolded modelling to build confidence with diagram interpretation.

• Avoid treating this as a standalone topic. Link to previous learning (elasticity, supply and demand) and forward to market failure.

Teaching Tips:

• Use live news stories to prompt class discussion.

• Assign students different markets (e.g., food, housing, transport) and ask them to explore how shocks in one sector affect others.

• Employ roleplay or decision simulations where students act as producers reacting to price changes in related markets.

Extension Activities:

• Have students track a single price shock (e.g., oil prices) and build a flow map of its ripple effects.

• Invite a local business guest speaker to explain how they adapt to changes in related markets.

• Use Skills Hub simulations mapped to this topic to deepen applied learning without increasing teacher workload.