TPO12-Q6

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TPO12-Q6

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The economics professor explains that the price of the product has a negative relationship with its demand. She also mentions two other contributory factors of the amount of a purchased product by consumer, besides the price of the product itself. First, demand for a product can be influenced by substitute products which are used interchangeably with the product, like butter and margarine. When the price of the butter increases, it is replaced with margarine and the demand for margarine increases. Secondly, complementary products cannot be used alone and are completed with another product. So their prices are affected by the other one, such as CD and CD player. The more the price for CD becomes, the less the demand for CD player would be.

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