Consider the demand for hamburgers. If the price of a substitute good (for example, hot dogs) increases and the price of a complement good (for example, hamburger buns) increases, can you tell for sure what will happen to the demand for hamburgers? Why or why not? Illustrate your answer with a graph.

Substitute goods and complementary goods:

In economics, the phrase substitute goods refer to a group of products that can be substituted for one another. Complementary goods, on the other hand, are a type of product that is utilized in conjunction with another to meet a specific consumer need.

If the price of the substitute good (hot dogs) rises, so will the demand for hamburgers, and if the price of the complement good (hamburger buns) rises, so will the desire for hamburgers, therefore the resulting shift in demand is impossible to predict.

Demand for hamburgers rises when the price of a substitute good (such as hot dogs) rises. This is evident by the fact that buyers purchase substitute goods at a lower cost. When the price of one good rises, so does the demand for all the others. The demand curve will shift rightward from D1 to D2 as a result of the desire for hamburgers, as seen in the graph.

Demand for hamburgers reduces whenever the price of a related commodity (such as hamburger buns) rises. This really is the case since complementary items are consumed together.

As a result, if the price of hamburger buns rises, the demand for hamburger buns will fall, and hence the demand for hamburgers will fall as well. The desire for hamburgers will cause the demand curve to shift downward from D1 to D3, as seen in the graph. We can't predict whether or not a demand for hamburgers will rise or fall which is not clear.