Question

Suppose that a decrease in the price of good X results in fewer units of good Y being sold. This implies that X and Y are A. substitute goods. B. normal goods. C. complementary goods. D. inferior goods. Submit Answer

Answer 1

Answer: Option (A) is correct.

Explanation:

Good X and Good Y are substitute goods. Substitute goods are the goods that can be consumed in place of each other. There is a positive relationship between the price of one good and the demand for its substitute good. For example; tea and coffee. If the price of tea increases then as a result demand for coffee increases, because drinking tea become more expensive for the consumers as compared to the coffee. So, the demand for coffee increases, despite its price remains the same.