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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
If, when the price of one good rises the demand for the other good also rises, they are substitutes. If the demand for that other good falls, they are complements.
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4.4. Cross-price Elasticity of Demand: Substitutes and Complements
autos demanded to rise, and thus we might expect to see a rise in the demand for gasoline. Ultimately, though, whether two goods are substitutes or complements is an empirical question answered solely by observation and statistical analysis. <span>If, when the price of one good rises the demand for the other good also rises, they are substitutes. If the demand for that other good falls, they are complements. And the result might not immediately resonate with our intuition. For example, grocery stores often put something like coffee on sale in the hope that customers will come in for coffee


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