Nacho Chips Market: Complementary Goods and Change in Demand (IB Economics)

Vocabulary flashcards covering complementary goods, substitutes, non-price determinants of demand, and income effects as illustrated by the Nacho chips market notes.

Complementary goods

Two goods that are often used together; a fall in the price of one leads to an increase in the demand for the other (examples: DVDs and DVD players; nacho chips and cheese).

Substitute goods

Two goods that can replace each other; a fall in the price of one leads to a decrease in the demand for the other (consumers switch to the cheaper option).

Change in demand

A shift of the entire demand curve caused by non-price determinants such as the number of buyers, income (normal vs inferior goods), prices of related goods (substitutes and complements), tastes, and expectations.

Normal good

A good for which demand rises as income rises.

Inferior good

A good for which demand falls as income rises.

Cross-price effect

The effect of the price change of one good on the demand for another; positive for substitutes and negative for complements.