Individual demand - substitutes and complements, Microeconomics

Individual Demand

Substitutes and Complements

1) The two goods are considered substitutes if an increase (decrease) in price of one lead to an increase (decrease) in quantity demanded of other.

  • For example movie tickets and video rentals

2) Two goods are considered complements if an increase (decrease) in price of one leads to a decrease (increase) in quantity demanded of other.

  • For example gasoline and motor oil

3) Two goods are independent when change in price of one good has no effect on the quantity demanded of the other

-If the price consumption curve is sloping downward, the two goods are considered substitutes.

-If price consumption curve is sloping upward, the two goods are considered complements.

*They could be both!

Posted Date: 10/10/2012 7:14:36 AM | Location : United States







Related Discussions:- Individual demand - substitutes and complements, Assignment Help, Ask Question on Individual demand - substitutes and complements, Get Answer, Expert's Help, Individual demand - substitutes and complements Discussions

Write discussion on Individual demand - substitutes and complements
Your posts are moderated
Related Questions
1.what is price mechanism? 2.how does price mechanism benefit an echonomy. 3.what are the characteristics of a centrally planned economy?

What are the factors that determine the volume of production?

the diagram used to illustrate abnormal and normal progits

Mikes' preferences for consumption and leisure may be represented by the Utility function: u(C, L) =  ( C-200)*(L-80) . His marginal utilities of leisure and consumption are (C-200

Allocative efficiency criteria are satisfied by the competitive model.  Because P = MC, in each market in the economy there is no over- or under- allocation of resources in this ec

suppose you have a coffee shop. list of fixed input and variable input for operating the shop

In the city of Gelato the market for ice cream is perfectly competitive. Aggregate demand for ice cream is: D(p) = 1200-25p where p is the price for one cone of ice cream. Al

What is meant by the multifaceted nature of the U.S. health care system? How is health care financed in the U.S.? What is the advantage and disadvantage of the U.S. multi-payer sys

Explain why subsidies to domestic firms act as a trade barrier. A trade barrier is broadly explained as any market intervention whereby the ratio of price of exports to price o

illustrate and explain the changing demand gor big Mac using the indifference curves and budget line