Chapter 2 Study Guide

Chapter 2 Study Guide - Micro Economics Chapter 2, pages...

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Micro Economics Chapter 2, pages 31-38 The only thing that cannot affect the demand for a good: a change in that good’s price Complements : two goods normally used together Example: coffee and sugar - an increase in the price of one of these goods makes the combination more expensive - if price of sugar goes up, people buy less sugar, and they also buy less coffee (even though the coffee price hasn’t changed) - a constant price but a smaller quantity demanded is a leftward shift of, or a reduction in, the demand curve for coffee - change in the price of one complementary good changes the price of its combination in the same direction o the quantity demanded of the combination changes in the opposite direction A change in the price of a good’s complement changes the demand for the good in the opposite direction . Substitutes : goods that can be used in place of each other Example: tea and coffee - an increase in the price of coffee makes the good, tea, more attractive - the rise in the price of coffee doesn’t affect the coffee’s demand, but it
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Chapter 2 Study Guide - Micro Economics Chapter 2, pages...

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