Discuss the difference between a complement and a substitute good. Suppose you have two goods x and y. If x and y are substitute, what happens to the demand for x when the price of y rises?

answer

watching

105

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Tod ThielLv2

27 Oct 2018

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

Suppose the demand for X is given by Q_X^d = 50 - 4P_X - 3P_Y - 5M + 3A, where P_X represents the price of good X, P_Y is the price of good Y, M is income and A is the amount of advertising on good X. Based on this information, we know that good X is a

A. Substitute for good Y and a normal good

B. Complement for good Y and an inferior good

C. Complement for good Y and a normal good

D. Substitute for good Y and an inferior good

What happens to demand when the following changes occur? The price of the commodity rises. Income decreases and the commodity is normal. Income decreases and the commodity is inferior. The price of a complement good increases. The price of a substitute good decreases.

(a) Giving examples, explain the difference between:
(i) an inferior good and a normal good;
(ii) substitute and complementary goods.
(b) Carefully explain what happens to the demand for a Giffen good as its price rises.