Changes in the prices of substitutes or compliments will cause the demand curve of a product...
Changes in the prices of substitutes or compliments will cause the demand curve of a product to move. When the price of a substitute rises, people will consume more of the product instead of the substitue which causes the demand curve to shift outward. For example, if the price of nike clothing increases, then a person can just buy new balance because they are pretty much the same iteam and can replace each other. When the price of a compliment rises then the demand of the product will decrease. For example, if the price of peanut butter rises then people might buy less jelly since pb&j is a popular sandwhich, you need both peanut butter and jelly to make it. How do you think of this ?
Homework Answers
Sol :
Yes , it is correct .
As , when goods are substitute of each other , Increases in prices of the substitute goods will imcrease the demand or shift the demand curve to the left of the other goods. And vice versa .
when goods are complementary of each other , increase in prices of one goods will decrease the demand of the other goods or shift the demand curve to the left.
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Changes in the prices of substitutes or compliments will cause
the demand curve of a product...
QUESTION 3 (CHAPTER 4 - SUPPLY AND DEMAND) a. What is the law of demand? What...
QUESTION 3 (CHAPTER 4 - SUPPLY AND DEMAND) a. What is the law of demand? What factors are taken as constant when plotting a demand curve? b. What happens to a demand curve if the income of the consumers increases? c. What happens to a demand curve for a product if the price of a substitute product increases? (Hint: Margarine and butter are substitute good. What would happen to the demand curve for margarine if the price of butter increases?)...
Other things remain unchanged, the market demand curve for a particular product is expected to shift leftwards when the price of that product declines.
Other things remain unchanged, the market demand curve for a particular product is expected to shift leftwards when the price of that product declines.Question 1 options:TrueFalseQuestion 2Other things remain equal, which of the following factors causes the market supply curve of Blue-ray players to shift leftwards?Question 2 options:The costs of producing a single Blue-ray player increases.The number of firms selling Blue-ray players increases.The sellers are expecting the price of Blue-ray players to decline in the soon future.Non of the above...
The above reflects the short-run supply and demand for jelly... which is a normal good. Which...
The above reflects the short-run supply and demand for jelly...
which is a normal good. Which graph best captures the
following:
a) The government taxes the production of jelly
b) Government begins to subsidize the production of peanut
butter (peanut butter and jelly sandwiches are very popular)
Graph 7
None of the above.
Graph 8
Graph 5
Graph 6
The above reflects the short-run supply and demand for jelly...
which is a normal good. Which graph best captures the
following:...
Question 1 Other things remain unchanged, the market demand curve for a particular...
Question 1 Other things remain unchanged, the market demand curve for a particular expected to shift leftwards when the price of that product declines. . True False Question 2 Other things remain equal, which of the following factors causes the market supply curve of Blue-ray players to shift leftwards? The costs of producing a single Blue-ray player increases. The number of firms selling Blue-ray players increases. The sellers are expecting the price of Blue-ray players to decline in the soon future. Non of the above factors causes the...
QUESTION 1 Suppose the short-run elasticity of demand for gasoline in the US retail market is -0.5, and the long-run e...
QUESTION 1 Suppose the short-run elasticity of demand for gasoline in the US retail market is -0.5, and the long-run elasticity of demand in the same market is -0.8. What is the impact of an increase in the US federal gasoline tax? A. Increase tax revenue in the short run and decrease tax revenue in the long run B. Decrease tax revenue in both short run and long run C. Increase tax revenue in both short run and long run...
12. A "decrease in the quantity demanded" means that a. the demand curve has shifted to...
12. A "decrease in the quantity demanded" means that a. the demand curve has shifted to the right. b. the supply curve has shifted to the left. C. price has declined and consumers therefore want to purchase more of the good. d. price has increased and consumers therefore want to purchase less of the good. 13. Which of the following pairs of goods would be most likely to be complements in consumption? a. olive oil and vegetable oil b. peanuts...
This question focuses on the idea of cross price elasticity (in effect, peanut butter and jelly)...
This question focuses on the idea of cross price elasticity (in effect, peanut butter and jelly) and the idea of complements and substitutes. We analyze data to see how the price of one product will affect the demand for another product. If your company produced Pallets, and you are provided analysis such that the demand for Pallets is estimated to be Qa= 1000 – 0.75pa+ 12pX – 21pZ + 0.12Y Note that pa= 80, pX= 50, pZ= 150, and Y...
The demand curve is downward-sloping because: Check all that apply. as prices rise, the purchasing power...
The demand curve is downward-sloping because: Check all that apply. as prices rise, the purchasing power of each dollar earned falls, and consumers are willing and able to buy more of a good. as consumers purchase substitutes, the quantity demanded of the good rises. as consumers purchase substitutes, the quantity demanded of the good falls. the benefit of consuming more of a good rises with each additional unit, so the □ price consumers are willing and able to pay also...
Consider some determinants of the price elasticity of demand: • Availability of close substitutes • Whether...
Consider some determinants of the price elasticity of demand: • Availability of close substitutes • Whether the good is a necessity or a luxury • Whether the good is broadly defined • The proportion of a consumer's budget spent on the good • Time people have to adapt to new price changes A good without any close substitutes is likely to have relatively(elastic or inelastic)demand, because consumers cannot easily switch to a substitute good if the price of the good...
24) An increase in the demand for bananas will NOT be caused by: A) a rise...
24) An increase in the demand for bananas will NOT be caused by: A) a rise in the price of apples. B) news that bananas help relieve stress in people buyers switching to a more healthy diet. D) a drop in the market price of bananas. 25) 26) If the demand for a good increases when there is high unemployment, we can conclude that the commodity is: 26) A) a good for which the law of demand does not apply...
QUESTION 3 (CHAPTER 4 - SUPPLY AND DEMAND) a. What is the law of demand? What factors are taken as constant when plotting a demand curve? b. What happens to a demand curve if the income of the consumers increases? c. What happens to a demand curve for a product if the price of a substitute product increases? (Hint: Margarine and butter are substitute good. What would happen to the demand curve for margarine if the price of butter increases?)...
The above reflects the short-run supply and demand for jelly...
which is a normal good. Which graph best captures the
following:
a) The government taxes the production of jelly
b) Government begins to subsidize the production of peanut
butter (peanut butter and jelly sandwiches are very popular)
Graph 7
None of the above.
Graph 8
Graph 5
Graph 6
The above reflects the short-run supply and demand for jelly...
which is a normal good. Which graph best captures the
following:...
12. A "decrease in the quantity demanded" means that a. the demand curve has shifted to the right. b. the supply curve has shifted to the left. C. price has declined and consumers therefore want to purchase more of the good. d. price has increased and consumers therefore want to purchase less of the good. 13. Which of the following pairs of goods would be most likely to be complements in consumption? a. olive oil and vegetable oil b. peanuts...
The demand curve is downward-sloping because: Check all that apply. as prices rise, the purchasing power of each dollar earned falls, and consumers are willing and able to buy more of a good. as consumers purchase substitutes, the quantity demanded of the good rises. as consumers purchase substitutes, the quantity demanded of the good falls. the benefit of consuming more of a good rises with each additional unit, so the □ price consumers are willing and able to pay also...
24) An increase in the demand for bananas will NOT be caused by: A) a rise in the price of apples. B) news that bananas help relieve stress in people buyers switching to a more healthy diet. D) a drop in the market price of bananas. 25) 26) If the demand for a good increases when there is high unemployment, we can conclude that the commodity is: 26) A) a good for which the law of demand does not apply...
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