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Explain the effect of a rise in the prices of 'related goods' on the demand for a good X. |
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Answer» Solution :There is POSITIVE relationship between price of substitue goods and the demand of a good. This means, when the price of substitue goods INCREASE, the demand of the good will ALSO increase. On the other hand there is a negative relationship between price of complementary goods and the demand of the commodity, this IMPLIES when price of the complementary goods RISES, the demand of the commodity will fall. |
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