Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 2P
To determine
Categorize the goods as substitute, complementary and unrelated goods.
Concept Introduction:
Substitute goods are those goods which can be used in place of each other. Increase in the price of one good implies the increase in the demand of other good and vice-versa.
Complement goods are those which can only be used together. We can’t use one good at a time. Increase in the price of one good implies the decrease in the demand of other good and vice-versa.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
2. Place the following goods and services into pairs of likely substitutes and pairs of likely complements. (You may use an item in more than one pair.)
The goods and services are: coal, oil, natural gas, wheat, corn, rye, pasta, pizza, sausage, skateboard, roller blades, video game, laptop, iPod, cell phone, text message, email, phone call, voice mail
1. Classify each pair of goods as substitutes, complements, or independent.
- shoes and sandals
- beef and chicken
- peanut butter and lumber
- wine and cheese
- tables and chairs
- shampoo and conditioner
Explain the general determinants in one paragraph.
GENERAL DETERMINANTS OF DEMAND• Good’s own price (P) is the key determinant of demand• Other determinants of demand:1. Level of income (Y) of the potential purchasers of the good or service.a. Normal good – a good in which an increase in income raises its sales.b. Inferior good – a good in which an increase in income causes a reduction in spending.2. Prices of related goodsa. Substitute good – a good in which can substitute for another good (competitor’sgood). An increase in the price of the substitute good or service causes an increase indemand for the another good.b. Complementary good – a good that complements with another good. That is, anincrease in demand for one causes an increase in demand for the other. An increase inthe price of a complementary good reduces demand for the another good.3. Population (number of consumers that consume goods/services)4. Tastes and preferences5. Consumer’s expectation towards future market…
Knowledge Booster
Similar questions
- Exercise 3. Tablets and laptops are substitutes. Due to manufacturer related issues, there is a deep shortage of tablet-specific parts. What would you expect to happen to the market (prices, supply, demand, quantity sold) shortly after the parts shortage in for each of the following products: Tablets? Laptops? You can answer each point above with a labeled graph or explain in words, taking into account the differences between a change in the demand (curve) and a change in quantity demanded.arrow_forwardUsing the table below:i. Calculate the cross-price elasticity of broccoli. ii. Are fish and broccoli complementary or substitute goods? Explain. Price of fish Quantity of fish Price of broccoli Quantity of broccoliPeriod 1 $7 8 lbs $4.50 10 lbsPeriod 2 $9 5 lbs $6.25 6 lbsarrow_forwardQUESTION 11 An increase in price of computers causes decrease in demand for software is an example of a. substitute goods b. inferior goods c. normal goods d. complements goodsarrow_forward
- # Are coffee and tea Substitute goods or compliment goods? Why?arrow_forward1. If substitutes are not readily available for a product, it has A. Inelastic demand. B. Elastic demand. ... 1... C. An income effect. D. A substitution effect. 2. A price increase causes a fall in a company's total revenue. This indicates that demand for the company's products is A. Steady B. Elastic C. Inelastic D. Fluctuating 3. Which direction will the demand curve shift if consumers' income rise? A. To the right B. To the left C. Upward D. Downwardarrow_forward1. Consumers perceive coffee and tea as substitutes.How would a decrease in the supply of coffee affect the market for tea? Increasing the supply for tea, ultimately increasing the price of tea as well Decreasing the demand for tea, ultimately decreasing the price of tea as well. Increasing the demand for tea, ultimately increasing the price of tea as well Decreasing the supply for tea, ultimately decreasing the price of tea as wellarrow_forward
- 38. Which of the following events will cause the demand curve for hamburgers to shift to the right? An increase in the price of pizza, a substitute for hamburgers b. An increase in the price of French fries, a complement to hamburgers c. An increase in the price of hamburgers d. A decrease in the price of hamburgersarrow_forward35. You are told that the cross-price elasticity between goods X and Y is +2,0. This means that a. Goods X and Y are normal goods. b. Goods X and Y are inferior goods. c. Goods X and Y are complementary goods. Goods X and Y are substitute goods.arrow_forwardWhich of the following pairs of goods are most likely substitutes? a. Cola and lemon lime soda b. Lettuce and salad dressing c. Peanut butter and gasoline d. Compact discs and compact disc playersarrow_forward
- Explain differences between a “change in demand” and a “change in quantity demanded.” (2)Find an example where there has been a change in demand of a good/service andexplain using a graph.arrow_forward10. Which of the following is NOT a determinant of the demand for gasoline? A. Consumers' incomes B. The price of diesel C. The price of automobiles D. The supply of gasoline E. All of the above are determinants of the demand for gasoline.arrow_forward3. Dove Soap 4. India Gate Basmati Rice Choose any two products from the list and answer the following. 1. List any two determinants of demand for the chosen products (2 Marks) 2. List any two determinants of supply for the chosen products. (2 Marks) 3. Explain the relationship between the determinant and quantity demanded of these two products. (2 Marks) 4. Explain the relationship between the determinant and quantity supplied of these two products. (2 Marks) 5. If there is any price ceiling and price floor imposition on these two products, what would be the effect? (2 Marks)arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you