Question

In: Economics

If the demand for good A increases when the price of good B increases​, then goods...

If the demand for good A

increases

when

the price of good B increases​,

then goods A and B are

A.

unrelated goods.

B.

complements.

C.

substitutes.

D.

There is not enough information to make a determination.

Solutions

Expert Solution

Answer - C. substitutes.

Explanation- Substitutes goods refer to those goods which can be used in the place of other goods or products. For example - tea and coffee, bulb and tube light, etc.

We can also say, the increase in the price of good B (coffee) will increase the demand for good A (tea) and vice Versa. If the price of coffee will increase then the consumer will prefer to buy its Substitutes or alternatives tea at cheaper prices. This is because consumers always try to maximize their satisfaction with a given income.

Rahul Sunny answered 1 year ago
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