Question

2. Some products compete closely with one another for the consumers' dollars. You may buy one or you may buy the other but you probably won't buy both. These products are said to be _ for each other. For these products, if the price of good Brises, the demand for good A For these products, the demand for good A varies directly with the price of good B. If B gets more expensive, the demand for A increases. If B gets cheaper, the demand for A decreases. Examples of these goods include _and (name two goods which have this relationship with one another). Graphed: (if the Price of Brises - 3. Some products go together in households' consumption habits. If you buy one you tend to buy the other one also (say - a barbecue grill and charcoal). These products are called These are goods which one tends to buy together if you buy them at all. For these products, if the price of good Brises, the demand for good A Graphed: (if the Price of B rises For these products, the demand for good A varies inversely with the price of good B. If B gets more expensive, the demand for A decreases. If B gets cheaper, the demand for A increases Examples of these goods include and _(name two goods which have this relationship with one another). 4. Another factor which can shift a demand curve is consumers! Sometimes the buying public's habits or likes or dislikes change (and not because of changes in income or changes in the prices of related goods). Advertising campaigns try to shift this variable. If these change in favor of a good, the demand for that good 5. The number of potential buyers in a market also changes, for example if more people move to an area. Our name for this is If that increases, the demand for a good 6. Finally, what happens to the demand for a product today is the public thinks its price will soon rise in the future)? We expect the demand for the product now to buyers decide to buy now rather than wait until later. This is a case of change in expectations about future prices.

Answer 1

Part 1) Some products compete closely with one another for the consumers’ dollar. You may buy one or you may buy the other but you probably won’t buy both. These products are said to be substitute for each other. For these products, if the price of good B rises, the demand for good A rises. For these products, the demand for good A varies directly with the price of good B. If B gets more expensive, the demand for A increases. If B gets cheaper, the demand for A decreases. Example of theses goods include red coloured pencil and blue coloured pencil. In this case, the consumer is only concerned about the total number of pencil, but doesn’t care about the colour at all.

Part 2) Some products go together in households’ consumption habits. If you buy one you tend to buy the other one also. These products are called complements. These are goods which one tends to buy together if you buy them at all. For these products, if the price of good B rises, the demand for good A declines. For these products, the demand for good A varies inversely with the price of good B. If B gets more expensive, the demand for A decreases. If B gets cheaper, the demand for A increases. Example of these goods include French fries and tomato ketchup.

Part 3) Another factor which can shift a demand curve is consumers’ tastes and preferences. If these change in favor of a good, the demand for that good increases (demand curve shifts upward to the right).

Part 4) The number of potential buyers in a market also changes, for example if more people move to an area. Our name for this is shift in demand due to change in the number of buyers. If that increases, the demand for a good increase.

Part 5) Finally, what happens to the demand for a product today if the public thinks its price will soon rise? We expect the demand for the product now to increase as buyers decide to buy now rather than wait until later. This is a case of change in expectations about future prices.