Economy, asked by gayatri700, 10 months ago

when price of substitute goods is decrease with diagram and schedule.​

Answers

Answered by shruti20066
0

Substitute Goods:

Substitute goods are those goods which can be used in place of one another for satisfaction of a particular want, like tea and coffee. Demand for a given commodity varies directly with the price of a substitute good. For example, if price of a substitute good (say, coffee) increases, then demand for given commodity (say, tea) will rise as tea will become relatively cheaper in comparison to coffee. Let us clear this with the help of Fig. 3.10:

As seen in the given diagram, price of coffee (substitute good) is shown on the Y-axis and demand for tea (given commodity) on the X-axis. When price of coffee rises from OP to OP1, demand for tea also rises from OQ to OQ1.

Complementary Goods:

Complementary goods are those goods which are used together to satisfy a particular want. Demand for a given commodity varies inversely with the price of a complementary good. For example, if price of a complementary good (say, sugar) increases, then demand for given commodity (say, tea) will fall as it will be relatively costlier to use both the goods together. Let us understand this through Fig. 3.11:

As seen in the given diagram, price of sugar (complementary good) is shown on the Y-axis and demand for tea (given commodity) on the X-axis. When the price of sugar rises from OP to OP1, demand for tea falls from OQ to OQ1.

Answered by vanunagar13
4

Aɴsʀ

The prices of complementary or substitute goods also shift the demand curve. ... When the price of a substitute good decreases, the quantity demanded for that good increases, but the demand for the good that it is being substituted for decreases.

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