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Microeconomics.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA BT – FIA FBT › Microeconomics.

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by Ken Garrett.
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  • November 3, 2020 at 7:16 pm #593994
    Mohapy
    Participant
    • Topics: 11
    • Replies: 3
    • ☆

    I would like to have more clarification on how the fall in price of other goods causes rightward shift of supply curve.

    November 3, 2020 at 7:26 pm #593995
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10606
    • ☆☆☆☆☆

    It is not a fall in the price of other goods in general. It is a fall in the price of complementary goods (see our notes, P136).

    For example, petrol and cars are complementary goods (if you buy one you will probably buy the other too). If the price of cars falls, then demand for petrol will rise. If demand rises the supply will respond by increasing too: more would be demanded at the same price – hence a rightwards shift in the supply curve.

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