Question

Explain how do the following influence demand for a good:

Fall in prices of the related goods.

Answer 1

1. If the related good is a substitute, demand for the given good falls because the substitute is now relatively cheaper; its demand curve shifts leftward.
2. If the related good is a complement, demand for the given good rises because the two goods are cheaper to use together; its demand curve shifts rightward.
3. A price change in an unrelated good does not generally affect demand for the given good.