pepsodent starts offering a free toothpaste sample to households.Discuss the effect on demand of colgate total in relation to increase in no of consumers.
As pepsodent decides to offer free toothpaste samples to the households, the number of consumers purchasing pepsodent will increase. This will in turn raise its demand. On the contrary, as colgate total is a substitute good for pepsodent, the number of consumers purchasing colgate total will fall. This will in turn decrease its demand. This fall in demand can be seen with the leftward shift in the demand curve of colgate total.
In the above figure, we can see, as the number of consumers for colgate total falls in relation to the increased number of consumers for pepsodent, the demand for colgate total falls. This can be seen with the leftward shift of the demand curve for colgate total from DD to D"D". Thus the quantity demand for colgate total falls from Q1 to Q2.