Demand and Supply - Demand Shift pg-16
Demand Shifts Out when the Price of a Complement Falls

Suppose the graph to the right is the yearly demand for 5-packs of DVD-R disks for all the students in a college dormitory. Drives that will allow a computer to burn DVD disks are obviously a complement to blank DVD-R disks.

When DVD burners sell for $500 each, the demand curve for DVD-R disk packs for the students in the dorm in question is given by demand curve D1. On D1, when DVD burners sell for $500, if a pack of DVD-R disks sells for $15, 50 packs will be bought in a year, while at a price of $30, 30 will be sold in a year. If the price of DVD burners falls to $200 the demand curve will shift out to D2. The reason is obvious. At the lower price more students will buy drives, allowing them to burn DVDs so more blank DVD-R disks will be sold. On demand curve D2, when DVD-R 5-packs sell for $15, 120 are sold per year, while at a price of $30 per 5-pack, 100 are sold per year.

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