Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Substitutes
B
Complements
C
Unrelated Goods
D
Inferior Goods
Understanding the Answer
Let's break down why this is correct
Answer
Maria's observation suggests that coffee and donuts are complementary goods. This means that when the price of coffee goes down, people tend to buy more coffee and, as a result, they also buy more donuts to enjoy with it. The relationship can be explained through cross-price elasticity of demand, which measures how the quantity demanded of one good changes in response to a price change in another good. In this case, since the price of coffee decreases and leads to an increase in donut purchases, we see a negative cross-price elasticity. For example, if coffee becomes cheaper and Maria buys two more donuts for every cup of coffee she buys, this shows how the two items are linked in consumer behavior.
Detailed Explanation
When coffee gets cheaper, Maria buys more donuts. Other options are incorrect because Some might think substitutes are similar products; Unrelated goods don't affect each other.
Key Concepts
Cross Price Elasticity of Demand
Substitutes and Complements
Consumer Behavior
Topic
Cross Price Elasticity of Demand
Difficulty
easy level question
Cognitive Level
understand
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