Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
What happens to the price and quantity of hamburgers, when a new burger restaurant opens up in town?
Expert Solution
Step 1
Substitute goods – these are 2 goods which can be used for a similar purpose, that means they are alternates of each other. Increases in the price(P) of one good will increase the demand(DD) for its substitute.
EG- Pepsi & Coca Cola, Tea & Coffee
Complementary Goods – these goods are used together. If the price of 1 good falls the price(P) of other good will also see a fall. The opposite is also true if the price(P) of 1 good increases then price(P) of its complement will also see an increase.
Eg – Car& Petrol, Phone & Charger
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