Factors influencing supply curve - prices of related goods, Managerial Economics

Prices of other related goods

i)           Substitutes:  If X and Y are substitutes, then if the price X increases, the quantity demanded of X falls.  This will lead to increased demand for Y, and this way eventually lead to increased supply of Y.

ii)         Complements:  If two commodities, say A and B are used jointly, then an increase in the price of A shall lead to a fall in the demand for A, which will cause the demand for B to fall too.

Posted Date: 11/27/2012 5:59:38 AM | Location : United States







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