Question

Identify which of the following would generate a decrease in the market demand fore-book readers, which are a normal good.

a. An increase in the price of downloadable apps utilized to enhance the thee-book reading experience, which are complements.
b. An increase in the number of consumers in the market fore-book readers.

c. A decrease in the price of tablet devices, which are substitutes.

d. Areduction in the incomes of consumers of e-book readers.

Short answer

a. and d.

Step-by-step solution

Step1. Introduction

When a good is consumed along with another, it is called complementary goods. The rise in demand of one would directly and positively affect the demand of other and vice versa.

Eg. shoes and socks.

When a good can be consumed in place of another, they are called substitutes of eachother. This rise in demand of one would negatively affect the demand of other.

Eg. Coke and Pepsi.

Step2. Explanation

a. increase in price of complements will reduce the demand of e-books.

d. since income has reduced, people would demand less of normal goods- e-books.