Question

- Consider the demand for apples. If the prices of a substitute good(bananas) increases and the price of a complement good (apple pie) increases, can you tell for sure what will happen to the demand for apples? Why or why not?

(Someone answered that question before. I need another answer.)

Answer 1

When the prices of substitute goods (banana) of a commodity (apple) increases then the demand for the actual commodity(apple) increases. Substitute goods are the goods which are consumed in place of the actual commodity. When then price of such commodity (banana)increases then the consumers will prefer more cheaper commodity, hence the demand for the actual commodity (apple) increases.
When the price of the complementary goods (apple pie) then the demand for the actual commodity (apple) decreases. Complementary goods are those which are used jointly or are related to each other. Any increase or decrease in price for one commodity affects the demand of the another commodity. When the price such commodity (apple pie) increases then the consumers will tend to buy less of the actual product (apple), hence the demand for the actual commodity (apple) which is related to the complementary good (apple pie) decreases