📚 Learning Guide
Inferior and Complementary Goods
easy

Inferior goods are to demand increase during economic downturns as complementary goods are to what?

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Learning Path
Learning Path

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Choose the Best Answer

A

Increased demand when the price of a related good falls

B

Decreased demand when consumer incomes rise

C

Unchanged demand regardless of price changes

D

Increased supply when production costs drop

Understanding the Answer

Let's break down why this is correct

Answer

Inferior goods are products that people tend to buy more of when their income decreases, like instant noodles or used clothing. In contrast, complementary goods are items that are often purchased together, like peanut butter and jelly. During economic downturns, when people have less money, they might still want to buy their favorite complementary goods, but they may buy less of them if they can't afford both. For example, if someone usually buys bread and butter together but faces financial difficulties, they might choose to buy only the bread and skip the butter. So, while demand for inferior goods rises in tough times, the demand for complementary goods may decrease if people can't afford to buy both items together.

Detailed Explanation

When the price of a complementary good drops, people buy more of it. Other options are incorrect because Some think that when people earn more, they stop buying complementary goods; It's a common belief that some goods are not affected by price.

Key Concepts

Inferior Goods
Complementary Goods
Consumer Behavior
Topic

Inferior and Complementary Goods

Difficulty

easy level question

Cognitive Level

understand

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