📚 Learning Guide
Inferior and Complementary Goods
hard

Which of the following scenarios best illustrates the relationship between an inferior good and a complementary good?

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Choose the Best Answer

A

As income increases, the demand for instant noodles (an inferior good) decreases while the demand for soy sauce (a complementary good) remains constant.

B

As the price of bread (a staple good) decreases, the demand for butter (a complementary good) increases.

C

As income decreases, the demand for public transportation (an inferior good) increases while the demand for gasoline (a complementary good) decreases.

D

As the price of coffee increases, the demand for sugar (a complementary good) decreases.

Understanding the Answer

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Answer

An inferior good is a type of product that people buy less of when their income increases, while a complementary good is a product that is often used together with another. For example, consider instant noodles as an inferior good; people might buy more of them when they have less money. Now, if we think about a complementary good, we can look at soy sauce, which many people use to enhance the flavor of instant noodles. When someone’s income rises, they might buy less instant noodles but could still purchase soy sauce if they enjoy cooking with it. This shows how the demand for the inferior good decreases with higher income, while the complementary good's use may remain steady or even increase with different types of meals.

Detailed Explanation

When people earn more money, they buy fewer instant noodles because they can afford better food. Other options are incorrect because This option confuses staple goods with complementary goods; This option mixes up the effects of income changes.

Key Concepts

Inferior goods
Complementary goods
Examples of inferior goods
Topic

Inferior and Complementary Goods

Difficulty

hard level question

Cognitive Level

understand

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