D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2

Complement [ Inverse ] Substitute [ Direct ] Milk Cereal Pop Tarts D1D1D1D1 D2D2D2D2 P P1P1P1P1 QD 1 P2P2 D1D1D1D1 D2D2D2D2 D P QD 2

D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 More income results in more demand for new cars; less demand for used cars. New Cars Used Cars Less income results in more demand for used cars; less demand for new cars.

D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 More demand for both new and used cars New Cars Used Cars 1 billion This is what we told 1 billion Chinese potential Chinese, as potential consumers consumers, when we opened trade relations trade relations with them in the 70s.

D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 iRate I f Steve Jobs responds to iRate customers who iPhone iSorry bought the iPhone at $599 and says, “iSorry, we will raise the price back to $599 in 3 weeks.” iPhone $399 Buy it now to save money.

D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 major shortage of toilet tissue If there is expected to be a major shortage of toilet tissue, then consumers will stock up now or risk not getting any.

D1 D1 D1 D1 D2 D2 D2 D2 P QD 1 QD 2 coming out of recession Let’s say that we are coming out of recession & consumers Positive future income feel secure about their jobs. [ Positive future income ]

D1 D1 D1 D1 D2D2D2D2 P QD 1 QD 2 going into a recession Let’s say that we are going into a recession and consumers Negative future income don’t feel secure about their jobs. [ Negative future income]