## Saturday, September 19, 2015

### Determinate of Demand - Compliments - Vada Pav and Coriander/Peanut Chutney

Compliments are two goods that are consumed usually with each other.
Compliments are usually introduced in the determinants of demand section, paired with substitutes

Today I want to introduce Vada Pav and Peanut and/or Coriander Chutney as compliments.

This is an Indian dish eaten on the streets and in the homes of Mumbai, India.

Here is a video of Nisha teaching how to create the Vado Pav with its chutney compliments.

Think,  potatoes deep-fried with spices and chutney spread on a bun.

So compliments are two goods that are usually consumed together. The AP asked this question with one good's (Vada Pav) price rising and then asks how this affects the demand curve for the second good.

Example - The price of Vada Pav has increased, how does this effect the demand curve for peanut/coriander chutney.

Obviously, when the price of a good increases this causes a change in the Qd (quantity demand) not the demand curve of the good whose price changed. A change in price affects the quantity demanded not the demand.

BUT, the second part of the question asks what happens to the demand curve for peanut/coriander chutney.

AND, since Peanut/Coriander chutney is eaten with Vada Pav the quantity demanded (consumption) of one will affect the consumption of the other.

Price increases for Vada Pav and therefore the Qd of Vada Pav decreases, it seems reasonable that with less (a decrease) of Vada Pav being consumed that the demand for peanut/coriander chutney would decrease.

So less graph that with a CLG (Correctly Labeled Graph)

Thinking, explanation - less Vada Pav consumed - less peanut/coriander chutney demanded.

AP 1995 question

AP 2005 (I believe)
Answer - (B) X & Y are complementary goods

AP Question

Answer - (B) An increase in the price of potatoes, if potatoes and beef are complimentary goods.