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Speaking Question 6

Listen to part of a lecture in an economics class.

(female professor)

So, when we talked about the demand for a product, we’re referring to how much consumers want to buy it, right? And often the demand for a product is influenced by its price, the more expensive it becomes the less chance people want to buy it.OK, but that’s not the whole story. Sometimes the demand for a product can also be influenced by the price of other related products.

First, there are other products called “substitute goods”. If products can be substituted for one another then, um, well, then they are called substitute goods. They are similar enough to be interchangeable. And, uh, the increase of price of one means the increase for the demand of the other.

Like, uh, like butter and margarine. They are pretty much used for the same purposes. Margarine’s butter’s substitute and you can bake equally well with either. Well, when the price of butter goes up, it becomes less affordable, and so what do people do? They buy margarine instead, right? So, uh, you see, increase of the price of butter increases the demand for margarine.

Now, another instance with the price of one product can influence the demand of another is, uh, is when you have two products that can’t be used without each other. Those products we call “compliment goods”. They compliment, or complete, each other, if you will. Like compact disks and compact disk players. You need both products in order to use either. So if the price of either product increases demand for both is likely to decrease.

And if the price of the CD’s goes up, well, demand for them will do down, right? And because CD’s and CD player compliment each other, what will also happen is that the demand for CD player will go down, too.”