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
Facilitating Restructurings- rationale in era of globalisation: There has been some progress in the last few years in efforts to improve the framework for sovereign restructur

What is third degree price discrimination? Explain with case analysis,give two successful & unsuccessful cases of 3rd degree price discrimination.

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Long Waves: Longer-term periods of stagnation or growth in the economy, that can last for a decade or more and reflect broader changes in technology, politics, and international re

Suppose taht two people, Michell andJames each live alone in an isolated region. They each have the same resources available, and they grow potatoes and raise chickens. If Michelle

What is Modern Economics? Modern Economics: Modern economics mostly developed within last sixty years, methodically studies individuals’ economic behavior as well as econo

#question.Question: Answer all parts (a, b, c, d, e & f). Consider the following insurance market. There are two states of the world, B and G, and two types of consumers, H and L,

Not sure how to graph & calculate a retail price of $30 & avg cost $20 assuming that the equation for demand is Q=10,000-9,000P, where P=retail price & Q=# sold per month.Then to s

What is Deflation?  Deflation in economics refers to reduce in the general price level, i.e. the nominal cost of goods and services as well as wages reduce. As, it is an opposi

How does the indifference curve and budget line for a neutral good look like?