Daffy’s is a pet care company that recently increased the average price of its services by 5%. As a result, the number of customers dropped by 4%. Buffy’s, a pet adoption company, opens up right next door to Daffy’s. How will this likely impact the demand for services at Daffy’s?
Daffy’s is a pet care company that recently increased the average price of its services by 5%. As a result, the number of customers dropped by 4%. Buffy’s, a pet adoption company, opens up right next door to Daffy’s. How will this likely impact the demand for services at Daffy’s?
Answer:
Daffy is a pet care company and Baffy is a pet adoption company.
When Buffy, a pet adoption company opens up right next to Daffy, this will increase the services needed for pet care. Buffy will need care for the adopted pets. As a result, demand for services at Daffy’s pet care company will increase.
Pet care will be considered as a complementary good for pet adoption. Because as Buffy will adopt more pets, it will also need more care related services and the demand for Daffy’s services will increase.
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