What are the effects of a change in the price of related goods, on the demand curve of other products?

Economics Dec 12, 2020

Expert Solution

The change in price of related goods affects the demand curve of other products in positive as well as negative manner. For example-,

As the price of tea leaves increases, the demand for it decreases. It results in a decrease in demand for sugar also and hence the demand curve for sugar shifts leftwards.
As the price for tea leaves increases, the demand for it decreases. It results in an increase in demand for coffee and hence the demand curve for coffee shifts to the right.

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