Question

Tomas increased his consumption of potato chips when the price of pistachios increased. For Tomas, potato chips and pistachios are A. substitutes in consumption. B. both inferior goods. C. complements in consumption. D. both luxury goods.

Answer 1

Answer: A. substitutes in consumption.

Explanation:

The substitutes in consumption are products that can be replaced by others and satisfy the same desires or the same need. They respond to the buyer's need to consume a product whose price increases or can no longer purchase it.

For example, in this case, Tomas can no longer acquire pistachios (which are a snack) because increased in price, therefore the potato chips are replacing the pistachio as a snack because it is cheaper.

I hope this information can help you.

Answer 2

Answer: A. substitutes in consumption.

Explanation: Substitutes can be used in place of something else, with the same function. That is they achieve a similar result or purpose. Substitutes-in-consumption are two or more goods that satisfy the same wants or needs and they play an important role in the market place by providing consumers with alternatives which helps generate competition in the market. As the price of one good decreases, the demand for its substitute may also decrease and vice versa.