Substitutes and complements With Groceries ….
Essential Question How do the laws of demand interact to establish prices in the economy?
Substitutes • A substitute is something that can be used INSTEAD of a particular good or service. • Substitutes can impact quantity demanded. • Goods that are substitutes satisfy the same set of goals or preferences. • good substitution is an economic concept where two goods are of comparable value.
2011 64 wipes $1.97 80 wipes $1.78 2012 56 wipes $1.97 72 wipes $1.78
Baby Wash Comparison • Why is the price so much more expensive for Johnson’s brand?
Sour Cream Comparison Same Price Which brand would you buy if the Kraft brand and Walmart brand were the same price? PRICE DECREASED IN 2012 TO $1.48 .. 10 CENTS CHEAPER.
Cheese Slices Comparison 2011 $2.58 VS $2.88 2012 $2.53 VS $2.98
Bottled Water Comparison Deer Park (that’s good water) for $3.98 and Great Value for $2.97
Dr. Pepper and Dr. Thunder Why is there such a price difference? Do the products taste the same? PRICES THE SAME IN 2011 AND 2012 !!!
Coca-Cola VS Sam’s Cola PRICES THE SAME IN 2011 AND 2012.
Lays VS. Great Value Brand WALMART PRICES STAYED THE SAME, BUT LAY’S INCREASED BY 10 CENTS IN 2012, FROM 2011.
WOW! HUGE Price Difference. WALMART PRICE REMAINED THE SAME .. CASCADE DECREASED TO $15.46 IN 2012, WHICH IS $2 LESS THAN 2011.
Very GENERIC brand 50 cents for 60 sheets in 2012. Sample in class … Do you think the name brand is worth the cost ???
58¢ difference – why ? 2011 prices shown. 2012 the same, except Nutri-Grain is now $2.50 (cheaper) !!!!
Cap’n Crunch and Berry Crunch 2011 prices shown 2012 prices : Berry Crunch $2.54 Cap’n Crunch $3.00
Last year, this same product was $2.00 .. 2011 and 2012 Prices were the same.
Cookies !!! 2011 Great Value brand actually rang up at $2.18, so the difference is even greater …. Great Value $1.98 (size smaller?) Chips Ahoy $2.50
White Bread .. $1.30 difference? Same price in 2011 and 2012.
Complements • Complements are items which are used in conjunction with one another. • Peanut butter and jelly are complementary items. Theoretically, if the price of peanut butter goes up, people will buy less peanut butter and less jelly because peanut butter and jelly are typically purchased together.
Review • The thing to remember is this: The prices of substitutes and complements are among the determinants of demand. • Compliments and substitutes illustrate the difference between changes in quantity demanded vs. changes in demand.