Learning Path
Question & Answer1
Understand Question2
Review Options3
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Explore TopicChoose the Best Answer
A
An increase in the price of potatoes will likely increase the demand for corn, a substitute good.
B
If the price of peanut butter rises, the demand for jelly, a complementary good, will likely increase.
C
Substitutes are goods that can be used in place of each other, while complements are goods that are used together.
D
An increase in the price of a complementary good will decrease the demand for the other good.
E
The demand for corn will decrease if the price of potatoes decreases.
Understanding the Answer
Let's break down why this is correct
Answer
In economics, substitutes are goods that can replace each other, meaning if the price of one goes up, people might buy more of the other. For example, if the price of coffee increases, some people might choose to buy tea instead, making coffee and tea substitutes. On the other hand, complements are goods that are often used together, so when the price of one goes up, the demand for the other usually goes down. A classic example is printers and ink; if the price of printers increases, fewer people will buy printers, and consequently, the demand for ink will also drop. Understanding these relationships helps businesses set prices and predict how changes in the market will affect sales.
Detailed Explanation
Other options are incorrect because This statement is incorrect; This is wrong.
Key Concepts
Substitutes and Complements
Consumer Behavior
Market Dynamics
Topic
Substitutes and Complements in Economics
Difficulty
medium level question
Cognitive Level
understand
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