Complements and Substitutes

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Presentation transcript:

Complements and Substitutes

Complements 1. Complements are goods that are often purchased together. 2. If A and B are complements, a change in the demand of a A causes the same change in the demand for B.

Complements 3. Example: Hamburger and Hamburger Rolls 4. If hamburger meat goes on sale, the demand for hamburger will increase. This will cause the demand for hamburger rolls to increase also. 5. If the price of hamburger meat skyrockets, the demand for hamburger will decrease. This will cause the demand for hamburger rolls to decrease also.

Substitutes 6. Substitutes are goods you might purchase instead of each other. 7. If A and B are substitutes, a change in the demand of a A causes the opposite change in the demand for B.

Substitutes 8. Example: Rye Bread and Wheat Bread 9. If rye bread goes on sale, the demand for it will increase. The demand for wheat bread will decrease. 10. If rye bread becomes expensive, the demand for it will decrease. The demand for wheat bread will increase.

Substitute or Complements? Coffee and Tea are substitutes. Needle and Thread are complements. Marker and Crayon are substitutes.