Change in the price of a related good, Microeconomics

Change in the price of a related good:

Goods relate to each other in two ways. Goods are either complements or substitutes.

Complementary goods are goods with joint demand. They are needed jointly before a want could be satisfied, e.g., camera and film. With complementary goods, a steep rise in the price of one will lead not only to a fall in its consumption but a fall in the consumption of the other good too. A fall in the price of one good would lead to an increase in the demand of the other. Substitute goods on the other hand, are goods that only one is needed to satisfy a want/need (not both). For substitutes, a fall in the price of one leads to a decrease in demand for the other and an increase in the price of one leads to an increase in the demand for the other, ceteris paribus.

Posted Date: 1/2/2013 1:16:03 AM | Location : United States

Related Discussions:- Change in the price of a related good, Assignment Help, Ask Question on Change in the price of a related good, Get Answer, Expert's Help, Change in the price of a related good Discussions

Write discussion on Change in the price of a related good
Your posts are moderated
Related Questions
Production: - Firms should choose how much of each to produce. - The alternative quantities can be illustrated by using product transformation curves. Product Transforma

Q. Define Migration in Microeconomics? Migration:It's the movement of human beings from one country or region to another. Sometimes migration is motivated by economic factors (

The Industrial Revolution The century after 1750, saw the industrial revolution proper: invention of steam engine, spinning jenny, power loom, hydraulic press, railroad locomot

1. Explain how absolute advantage and comparative advantage differ? 2. Give an example in which a person has an absolute advantage in doing some thing but another pers

Discuss how the opportunity cost principle influence a supplier''s decision to supply labour

The enzymes are highly specific in nature. During enzymatic reaction the enzyme is so built that it binds to the substrate in a specific manner. The stepwise mechanism of enzyme ca

1. Suppose the banking system has reserve of $750000, demand deposits of $2500000 and a reserve requirement of 20%. a. if the fed now purchases $125,000 worth of govt bonds from t

define economics in plural sense. .

Reorder Point Techniques Systems based on reorder points assume that demand is uniform and predictable and that there is no true identifiable time of need. Hence, stock must a

How do I draw and interpret a combined ppc curve?