00:01
Looking at a variety of goods, we first want to categorize these by what type of good they are.
00:05
Are they a complementary goods, substitute goods, or independent goods? so let's take a look at these.
00:10
So we see real quick what stands out to me, i'm looking at beef, lamb, and pork, three types of meat, which can probably be substituted for one another.
00:19
So under substitutes, i'm going to put these three, beef, lamb, and pork.
00:27
And now looking at, let's see, cigarettes and gum.
00:30
Well, this sounds kind of goofy, but apparently they are complementary goods of one another.
00:35
People tend to chew gum and smoke cigarettes together.
00:39
So we'll put cigarettes and gum under complementary goods.
00:45
Now we can look at radio and tv.
00:48
Well, radio and tv are both kinds of entertainment or means of getting information, types of media, right? but you're going to get the same information from them.
01:00
So these could be roughly substitute goods of one another.
01:04
We have radio and tv under substitute goods.
01:08
Now, paperbacks, well, paperbacks are, they don't really have anything to do with anything else in here.
01:13
So paperbacks are probably going to be independent goods.
01:20
Now we can look at all these types of travel.
01:23
We have air travel, bus travel, and taxis.
01:26
Now, it seems as though maybe these should go under substitute goods because, again, they all fall under this category of, travel, but the way i see it personally is that air travel is more independent of the other two because air travel, right, we travel by air if we're going very long distances versus bus and taxis, those are more substitute goods in my mind because we're going to choose one or the other if we're just traveling through town or shorter distances.
01:56
Now what we want to know is how might the demand curve shift for each of these if the price of another good goes up.
02:05
So let's start with complementary goods.
02:06
Now if the price of cigarettes goes up, what will happen to the demand curve for gum? well, because they're compliments of one another, the demand is going to go down because people like to consume these together...