136k views
24 votes
Explain the 'price effect' for normal 'substitutes' and 'complementary' goods.​

User FredRoger
by
7.0k points

1 Answer

9 votes

Answer:

When the price of a good that complements a good decrease, then the quantity demanded of one increases and the demand for the other increases. When the price of a substitute good decreases, the quantity demanded that good increases, but the demand for the good that it is being substituted for decreases.

User Yuval Roth
by
6.6k points