Question

how is the supply of commodity affected by increase in other goods

Answer 1

Related goods generally refer to substitutes or compliments.

Two goods are referred to as substitutes if they can be used in place of one another. On the other hand, goods that are consumed together are referred to as complements.

Of course, the degree of substitutability and complementarity differ for different set of goods.

Now as asked in the question, let us understand how price of a substitute or a compliment affects the demand of a good.

Let us take the example of an ink pen.

An ink pen has substitutes like pencil, gel pen, ball point pen etc. If price of any such substitute increase, we would expect an increase in demand for ink pen keeping other factors constant as ink pen would become relatively cheaper. So, demand of the good in question and price of related good is positively related in case of substitutes.

For the same product, ink pen, an ink pot would be a complement. People generally buy these two things together. Any increase in price of ink pot would make people demand less of ink pen as buying an ink pen would become costly as they’ll have to buy ink pot too to actually use that ink pen. Hence demand of the good in question and price of related good is negatively related in case of complements.

To conclude, price of related goods could affect demand of a good positively or negatively depending upon whether goods together are viewed as substitutes or compliments.