Question

4) Suppose that when the price of hamburgers increases, the Ruiz family increases their purchases of hot dogs. To the Ruiz family A) hamburgers and hot dogs are complements. B) hamburgers and hot dogs are inferior goods. C) hamburgers and hot dogs are normal goods. D) hamburgers and hot dogs are substitutes.

Answer 1

Answer:

D) hamburgers and hot dogs are substitutes.

Explanation:

Option A is incorrect. When the price of one good increases, the demand for other good decreases. It is called complementary goods. In this question, due to the increase in the price of hamburgers, the Ruiz family started taking hot dogs. Therefore, hot dogs price is not increasing. Therefore, it is a substitute good. Substitute goods state that the increase in the price of one good leads to the increase in demand for another good. Therefore, option D is correct.

Normal goods and inferior goods are related to income, so those are not answers.