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How the Quantity of a Good you buy is Affected by Changes in the Prices of Substitute Goods and Complementary Goods

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Explain how the quantity of a good you buy is affected by changes in the prices of (a) substitute goods and (b) complementary goods.

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Quantity, Substitutes and Complimentary Goods

Quantities produced vary when prices change for pretty much anything relevant to the product. In this case, it deals with substitutes and compliments.

Substitutions are products that co-vary. In other words, when one goes up in price, the substitutes go up in price. We know that there is an energy drink phase going on. It's a little faddish, but it does not exist by itself. Since people clearly want to be pepped up for whatever reason, substitutes like coffee, chocolate, cocaine and adderall will also see a spike in demand. Someone who wants an AMP might settle for a cup of coffee in the meantime. It is a substitute, an acceptable one.

Think of it this way: it deals with classes of goods rather than good themselves. If more automobiles are ...

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The following posting explains how the quantity of a good you buy is affected by changes in the prices of substitute goods and complementary goods.

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Substitution and income effects

1. One of the major concerns of managers and managerial economics is the demand for a company's product. Many factors influence the demand curve for a product, and they all must be included, to some degree, in estimating the demand curve. Define the following factors and discuss how they can affect the demand curve for a product:
â?¢ Inferior versus normal goods
â?¢ Substitution and income effects
â?¢ Derived demand
â?¢ Changes in demand and changes in quantity demanded
Support your answers with examples and reasoning.

2. With regard to profit maximization, managers are concerned about the responsiveness of the quantity demanded for variables such as the price of a product, prices of related products, and consumer incomes. Describe the types of measures and information a manager requires to measure the effects of these variables on costs and revenues. How do these measures assist in profit-maximizing decisions?
Support your answers with examples and reasoning.

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