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Substitutes and Complements in Economics

This topic explores the relationship between substitute and complementary goods in the context of price changes. Specifically, it examines how an increase in the price of one good, such as potatoes, can lead to increased demand for its substitute, like corn, while also considering the complementary nature of goods like peanut butter and jelly. Understanding these relationships is significant in predicting consumer behavior and market dynamics, which is crucial for making informed economic decisions.

17 practice questions with detailed explanations

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Practice Questions

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1

Which of the following pairs of goods are most likely to be considered complements?

Bread and butter are complements because they are often used together. Other options are incorrect because Some people think coffee and tea are comple...

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2

If the price of a complementary good increases, what is likely to happen to the demand for its complement, assuming the goods are consumed together?

When the price of a complementary good goes up, people buy less of it. Other options are incorrect because Some might think that if one good gets more...

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3

Which of the following pairs of goods are most likely to be considered substitutes in the context of consumer choice?

Tea and coffee are substitutes. Other options are incorrect because Some might think these are substitutes because they can both spread on bread; Peop...

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4

How do substitutes and complements influence consumer behavior and pricing strategies in a competitive market?

Substitutes are products that can replace each other. Other options are incorrect because This answer mixes up how substitutes and complements work; T...

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5

If the price of a substitute for a good increases, what is the likely effect on the equilibrium price and quantity of the original good, assuming demand is elastic?

When the price of a substitute goes up, people will buy more of the original good instead. Other options are incorrect because This answer suggests th...

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6

Which of the following pairs of goods are considered substitutes in economics?

Butter and margarine can replace each other. Other options are incorrect because Some think coffee and tea are substitutes, but many people enjoy both...

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7

Which of the following pairs of goods are most likely to be considered complements?

Bread and butter are complements because they are often used together. Other options are incorrect because Many people think coffee and tea are comple...

easymultiple_choiceClick to view full solution
8

If the price of coffee increases, what is likely to happen to the demand for tea, assuming tea is a substitute for coffee?

When coffee gets more expensive, people look for cheaper options. Other options are incorrect because Some might think that if coffee is expensive, pe...

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9

Arrange the following steps to demonstrate the impact of a price increase in potatoes on the demand for corn and peanut butter and jelly:

When the price of potatoes goes up, people might buy less of them. Other options are incorrect because This answer suggests that demand for corn incre...

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10

If potatoes are to corn as peanut butter is to ____?

Peanut butter and jelly are often eaten together. Other options are incorrect because Jam is similar to jelly, but they are not the same; Bread is oft...

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11

If the price of potatoes increases significantly, which of the following is the most likely economic outcome regarding corn, and what is the underlying cause of this effect?

When potatoes cost more, people look for cheaper options. Other options are incorrect because This idea suggests that if potatoes are expensive, peopl...

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12

If the price of potatoes increases significantly, what is likely to happen to the demand for corn?

When potatoes cost more, people might buy corn instead. Other options are incorrect because This answer suggests people will still want potatoes even ...

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13

When the price of potatoes increases, the demand for corn, which is a __________, is likely to rise as consumers seek alternatives.

When potatoes cost more, people look for other foods. Other options are incorrect because Some might think complements go together, like peanut butter...

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14

Which of the following statements accurately describe the relationships between substitutes and complements in economics? Select all that apply.

Other options are incorrect because This statement is incorrect; This is wrong....

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15

If the price of peanut butter increases significantly, which of the following scenarios best illustrates the economic concepts of substitutes and complements?

When peanut butter gets more expensive, people look for other spreads. Other options are incorrect because This option suggests that people buy less j...

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16

A local grocery store notices that the price of potatoes has significantly increased due to a supply shortage. As a result, they observe an increase in the sales of corn and a decrease in the sales of peanut butter. How can the concepts of substitutes and complements explain this situation?

When potato prices go up, people look for cheaper options. Other options are incorrect because This answer suggests that people would buy more potatoe...

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17

If the price of potatoes increases significantly, what is the most likely outcome for corn, a substitute good?

When potatoes cost more, people look for cheaper options. Other options are incorrect because This answer suggests that higher potato prices would mak...

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