Economics Today: The Micro View (18th Edition)
18th Edition
ISBN: 9780133885071
Author: Roger LeRoy Miller
Publisher: PEARSON
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Chapter 3, Problem 5P
To determine
Give an example of a complementary and a substitute product in consumption for each of the following items:
- Bacon
- Tennis racquets
- Coffee
- Automobiles
Content information:
Complement goods are often used together. For example, car and petrol. As
Substitute goods are used in place of each other. If the price of a substitute good rises, demand for the other good rises as people always prefer the cheaper good. On the other hand, as price of the substitute good falls, demand for its related goods also falls. E.g. tea and coffee.
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Hello Professor,
A rise in consumption in the economy would cause an increase in aggregate demand. Therefore, when consumers spend money on everyday goods and services, it not only helps to stimulate economic growth, but it could also present potential issues like unsustainable debt levels or inflation. I believe that it would be beneficial to consider such factors and adopt a purchasing strategy to help navigate the challenges posed by inflation or unsustainable debt levels.
First, do you think our business will be affected because inflation is rising? How?
Yes, I do believe that the business will be affected because of inflationary pressures. Inflation rising will affect the cost of goods, services, and labor, which could lead to higher operating expenses. The potential reduction of profit margin because of inflation could lead to a smaller percentage of revenue being retained as profit. Therefore, inflation rising will force us to raise prices for…
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Economics Today: The Micro View (18th Edition)
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