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A and B are complementary goods. Explain the effects of change in price of A on demand for B. |
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Answer» Complementary goods are those goods which complete the demand for each other. When the price of good A increases, its demand will decrease, which will lead to a decrease in its complementary good B because both the goods are used jointly. Similarly, if the price of good A decreases, its demand will increase, which will lead to increase in its complementary good B. |
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