Microeconomics: Complementary Goods and Demand
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Microeconomics: Complementary Goods and Demand

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Questions and Answers

What is the direction of the supply curve?

  • Vertical
  • Downward to the left
  • Horizontal
  • Upward to the right (correct)

    • Which of the following is a non-price determinant of supply?

  • Taxes
  • Demand of the good
  • Price of the good
  • Producer's expectation (correct)

    • What happens to the demand curve when there is an increase in income?

  • It shifts to the left
  • It remains the same
  • It becomes vertical
  • It shifts to the right (correct)

    • What is the relationship between the price of complementary goods and their demand?

    <p>When the price of one good increases, the demand for the other good decreases</p> Signup and view all the answers

    What is the Law of Supply?

    <p>The higher the price, the higher the quantity supplied</p> Signup and view all the answers

    Which of the following is an example of complementary goods?

    <p>Key and lock</p> Signup and view all the answers

    What is the primary consideration for a seller when determining profitability?

    <p>The price of the good</p> Signup and view all the answers

    What is the effect of an increase in taxes on the supply of a good?

    <p>It decreases the supply of the good</p> Signup and view all the answers

    What happens to the supply of goods when there is a tax increase?

    <p>The supply decreases</p> Signup and view all the answers

    What is the effect of good weather on the supply of goods?

    <p>There is an abundance of supply</p> Signup and view all the answers

    What is the primary purpose of a subsidy?

    <p>To assist an industry or business to keep prices low</p> Signup and view all the answers

    What happens to the supply of goods when there is an expectation of a price increase in the future?

    <p>The supply decreases temporarily</p> Signup and view all the answers

    What is the effect of an increase in the number of sellers or producers on the supply of goods?

    <p>The supply increases</p> Signup and view all the answers

    What is the role of technology in the supply of goods?

    <p>It helps to increase the supply</p> Signup and view all the answers

    What is the effect of a charitable institution on the supply of services?

    <p>The supply of services increases</p> Signup and view all the answers

    What determines the supply of goods and services?

    <p>The price of the good and other relevant factors</p> Signup and view all the answers

    What is the most important determinant of demand?

    <p>Price</p> Signup and view all the answers

    What happens to the demand curve when there is a decrease in quantity?

    <p>It shifts to the left</p> Signup and view all the answers

    What is an example of a non-price determinant of demand?

    <p>All of the above</p> Signup and view all the answers

    What type of goods are considered alternatives to each other?

    <p>Substitute goods</p> Signup and view all the answers

    What happens to the quantity demanded when there is an increase in consumer income?

    <p>It increases</p> Signup and view all the answers

    What is the relationship between the price of a good and the quantity demanded?

    <p>Inverse</p> Signup and view all the answers

    What is an example of a determinant of demand that is related to the consumer's expectations?

    <p>Price/consumer expectation</p> Signup and view all the answers

    What type of goods are considered to be used together?

    <p>Complementary goods</p> Signup and view all the answers

    Study Notes

    Complementary Goods

    • A complementary good is a product that works or partners with another good.
    • If one of the two products undergoes a price increase, both products' demands will decrease.
    • Examples of complementary goods include key and lock, or printer and ink.

    Income and Demand

    • An increase in income will shift the demand curve to the right.
    • Determinants of demand include price, income, taste and preferences, population, price/consumer expectation, and price of related goods.

    Law of Supply

    • There is a direct relationship between price and quantity supplied.
    • The supply curve slopes upward to the right.
    • As price increases, supply will also increase.

    Determinants of Supply

    • Price is considered first to determine profitability.
    • Non-price determinants include:
      • Taxes: An increase in taxes will decrease supply.
      • Subsidy: A government grant to assist an industry or business.
      • Weather: Good weather can increase supply, while bad weather can lead to shortages.
      • Technology: Upgrading technology can increase supply.
      • Producer's expectation: Expecting higher prices in the future may lead to hoarding products.
      • Price of related goods: Similar to the demand.
      • Number of sellers or producers: An increase in sellers or producers can lead to a profit.

    Taxes

    • Taxes are a government revenue that comes from households and firms.
    • Types of taxes include:
      • Tax stamp (Buwis): Found in cigarettes, alcohol, etc.
      • Donor's tax: A tax on a donation or gift.

    Subsidy

    • A subsidy is a sum of money granted to assist an industry or business.
    • Subsidy can help keep prices low or competitive.

    Technology

    • Technology can help produce more goods and services.
    • It is used for marketing, advertisements, feedback, and producing more services.

    Changes in Demand

    • A shift to the right on the demand curve indicates an increase in quantity.
    • A shift to the left on the demand curve indicates a decrease in quantity.
    • Y-axis represents price, while X-axis represents quantity.

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    Description

    Learn about complementary goods, how they affect demand, and the factors that influence demand in microeconomics.

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