Divide the students into pairs/small groups and then ask them what they think the impact of a 20% fall in the price of the first product in each pair will be on the demand for the second product. Options may be chosen from the dropdowns in the demand column.
Once they have done this, ask for views from different groups, discussing where differences occur between groups (someone will be bound to make some sort of spurious link between cars and bananas!).
From here it should be easy to introduce the idea of substitutes and complements, the sign of XED and the fact that the relationship can be stronger or weaker in different cases.
| 20% fall in the price of | Impact on demand for | Demand changes… | |
|---|---|---|---|
| 1 | Petrol | Cars | |
| 2 | Tea | Coffee | |
| 3 | Xbox 1 | Call of Duty | |
| 4 | BP petrol | Shell petrol | |
| 5 | Xbox 1 | Playstation 4 | |
| 6 | Cars | Petrol | |
| 7 | Cars | Motorcycles | |
| 8 | Cars | Bananas | |
| 9 | Bananas | Apples | |
| 10 | Bus travel | Cars | |
| 11 | Evian | Volvic | |
| 12 | Iphones | Itunes downloads | |