Question

Does a rise in price of other goods have same effect on demand for a commodity? Give resaons​

Answer 1

A rise in the price of a commodity reduces its demand and a reduction in its price increases the demand. Thus, demand is more at a lower price and less at a higher price.Price of Related goods:

Related goods are of two types:

(i) Substitute goods and

(ii) Complementary goods.

(a) Substitute Goods:

Goods which can be used in place of each other are called substitute goods, for example tea and coffee.

(b) Complementary Goods:

Goods which are used together to satisfy a given want, are called complementary goods.