📚 Learning Guide
Cross-Price Elasticity of Demand
easy

Complementary goods relate to each other as substitutes relate to: A: demand changes :: B: price changes :: C: quantity supplied changes :: D: market equilibrium changes

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Learning Path
Learning Path

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Choose the Best Answer

A

demand changes

B

price changes

C

quantity supplied changes

D

market equilibrium changes

Understanding the Answer

Let's break down why this is correct

Answer

Complementary goods are products that are usually consumed together, like peanut butter and jelly. When the price of one complementary good goes down, the demand for the other often increases because people tend to buy both together. In contrast, substitute goods are products that can replace each other, such as butter and margarine. When the price of one substitute good goes up, the demand for the other typically increases as people switch to the cheaper option. Therefore, the correct answer is that complementary goods relate to each other as substitutes relate to demand changes, because both relationships show how price changes can influence the amount people want to buy.

Detailed Explanation

Substitutes are goods that can replace each other. Other options are incorrect because Some might think demand changes are the same as price changes; Quantity supplied changes focus on how much of a good is available.

Key Concepts

Cross-Price Elasticity of Demand
Substitutes and Complements
Market Behavior
Topic

Cross-Price Elasticity of Demand

Difficulty

easy level question

Cognitive Level

understand

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