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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4

For example, grocery stores often put something like coffee on sale in the hope that customers will come in for coffee and end up doing their weekly shopping there as well. In that case, coffee and, say, cabbage could very well empirically turn out to be complements even though we do not normally think of consuming coffee and cabbage together as a pair (i.e., that the price of coffee has a relation to the sales of cabbage).

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4.4. Cross-price Elasticity of Demand: Substitutes and Complements
al analysis. 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. <span>For example, grocery stores often put something like coffee on sale in the hope that customers will come in for coffee and end up doing their weekly shopping there as well. In that case, coffee and, say, cabbage could very well empirically turn out to be complements even though we do not normally think of consuming coffee and cabbage together as a pair (i.e., that the price of coffee has a relation to the sales of cabbage). For substitute goods, an increase in the price of one good would shift the demand curve for the other good upward and to the right. For complements, however, the impact is


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