Individual demand - substitutes and complements, Microeconomics

Assignment Help:

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!


Related Discussions:- Individual demand - substitutes and complements

Disadvantages of mixed economy system, The drawbacks of a mixed economy act...

The drawbacks of a mixed economy actually depend on how "mixed" it is. For instance, if it is mixed more towards a free-market, there is little regulation (some may see this as a g

Mirginal utility, what is the basis of marginal utility

what is the basis of marginal utility

The theory of demand :the utility approach, Prove that the utility approach...

Prove that the utility approach and the indifference curve approach yield the same consumer equilibrium.

Summary of education and economic development, Normal 0 false ...

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

Dumping, Dumping In the international marketing, when an organization ...

Dumping In the international marketing, when an organization charges less for goods than it real cost or less than the organizations charges in its home market. This procedure

Income and substitution effects, Income and Substitution Effects A fall...

Income and Substitution Effects A fall in price of a good has the two effects: Substitution & Income -Substitution Effect Consumers will tend to buy more of the good

Rational expectations and economic theory, RATIONAL EXPECTATIONS AND ECONOM...

RATIONAL EXPECTATIONS AND ECONOMIC THEORY  : Much of undergraduate macroeconomic theory is discussed on the assumption that, in the short run, the expectations of economic age

Find the expression for the gradients of the ac functions, The following ar...

The following are AC and TC functions for various firms (i). AC = 140/Q + 20 (ii) AC - a/Q = k (iii) TC - 10 =2Q + 0.1Q 2 (iv) TC - k - βQ = cQ 2 Where a, k, β and

Esalstcity of demand and supply, why is the concept of elasticity crucial t...

why is the concept of elasticity crucial to the study of economics?

Microeconomics supply and demand curve question, I''m having trouble with t...

I''m having trouble with this problem.....I must have missed the class that it was discussed in. I''m more confused with the interpreting the equations with all the Labor demand/La

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd