The relationship between the demand for two goods can be influenced by various factors, including whether the goods are substitutes or complements. Here's how the demand for one good can be affected by the increased demand for another:
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Substitutes: If goods are substitutes for each other (e.g., butter and margarine), an increase in the demand for one good (e.g., butter) typically leads to an increase in demand for the other good (e.g., margarine), as consumers may switch to the substitute if the price of the first good rises. However, this is a nuanced relationship; generally, an increase in demand for one substitute will usually lead to an increase in demand for the other.
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Complements: If the goods are complements (e.g., coffee and sugar), an increase in demand for one good (e.g., coffee) will lead to an increase in demand for the other good (e.g., sugar), as consumers buy them together.
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Price Changes: If the price of a good drops, it can lead to increased demand for that good and potentially also for its substitutes, depending on the elasticity of demand and consumer preferences.
In summary:
- Increased demand for substitutes: Demand for the other good may decrease.
- Increased demand for complements: Demand for the other good increases.
Thus, all four statements presented are characteristics of how demand interacts between different goods under different circumstances.
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