Explain how the following influence demand for a good:
Fall in prices of the related goods.

Fall in Prices of the Related Goods: Related goods may be complementary or supplementary.

In Case of Substitute Goods: Let “A” and “B” are substitutes. If the price of the good “A” falls, then the consumer will shift their preference towards that good “A”. As a result, the demand for the good “B” decreases. Ex. If the price of tea falls, then the supply of coffee will fall.

In Case of Complementary Goods: Suppose “M” and “N” is complementary goods. If the price of the goods “M” falls, then the consumer will shift their preference towards its complementary good “N”. This will lead to increase in the demand of the good “N.