Question

What is the difference between substitutes and complements in consumption? What effect will a decrease in...

What is the difference between substitutes and complements in consumption? What effect will a
decrease in the price of inkjet printers have on the demand for inkjet cartridges?

Homework Answers

Answer #1

The difference between the substitute goods and the complementary goods are , the complementary goods are consumed togther like pen and ink, gasoline and car, etc.... As the name suggests the substitute goods are substitute to each other. That is the one good is a replacement for the other good , like tea and coffee, burger and sandwiches etc....

The printer and catridges are complementary goods, the complementary goods have negative price elasticity of demand. That is a decrease in the price of one good will increase the demand for the other good and vice versa.

In this scenario, a decrease in the price of inkjet printers will increase the demand for catridges.

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