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Question
How does change in the price of complementary good affect the demand for the given good? Explain with the help of an example.
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Solution
Demand for a commodity in relation to the price of the complementary good
Complementary goods are purchased jointly such as ink and ink pens.
Increase in price of the complementary good:
If there is an increase in the price of a good, then the demand for another good will decline. So the demand curve shifts parallel to the left, i.e. from D1D1 to D2D2
A decrease in the price of the complementary good:
If there is a decrease in the price of a good, then the demand for another good will increase. So the demand curve shifts parallel to the right, i.e. from D1D1 to D2D2.
RELATED QUESTIONS
A 5 percent fall in the price of a good raises its demand from 300 units to 318 units. Calculate its price elasticity of demand.
When price of a commodity falls by Rs 1 per unit, its quantity demanded rises by 3 units. Its price elasticity of demand is (−) 2. Calculate its quantity demanded if the price before the change was Rs 10 per unit.
Write Short note on the following.
Ratio method of measuring price elasticity of demand ?
The account in which the specific amount is deposited per month regularly is known as ______.
Match the following:
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Group A
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Group B
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1. Cars and petrol
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a. Elastic demand
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2. Point method
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b. Complementary
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3. Necessary goods
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c. Geometric method
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d. Inelastic demand
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State whether demand will be Elastic or Inelastic. Give reasons for your answer.
The demand for salt by households.
The government wants to reduce the consumption of good by 10%. The price elasticity of demand for elasticity is -0.4. The government should raise the price of elasticity by ______.
The price of Y falls from ₹ 8 to ₹ 6. The quantity demanded increases from 100 units to 125 units. The price electricity of demand will be ______.
When the price elasticity of demand for a good equals ______.
Which of the following is the most likely reason for the relatively high elasticity of bottled water?
Assertion (A): Demand for a commodity with large number of substitutes with be less elastic.
Reason (R): With large number of substitutes, even a small rise in its price will induce the buyers to go for its substitutes.
The nature of a commodity determines its price elasticity of demand. Explain.
Explain briefly the factors on which elasticity of demand depends.
State 3 factors which affect price elasticity of demand.
How does the nature of a commodity affect its price elasticity of demand?
How does the nature of a good affect its elasticity of demand?
Which of the following correctly describes the relationship between availability of substitutes and price elasticity of demand?
What effect do habitual consumption patterns have on price elasticity of demand?
