Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This i

Question

Alchen [17]

3 years ago

12

Two goods are considered to be related goods by many buyers: if the price of one increases, buyers buy more of the other. This i

ndicates that the two goods are complements.
(A) True
(B) False

Business

1 answer:

vovikov84 [41] · Answer 1 · 2022-09-05T03:43:53+03:00

Answer: False.

Explanation:

False.

This indicates that the two goods are substitute goods, not the complementary goods.

In case of complementary goods, the price of one good is inversely related with the demand for other related good. For example, car and petrol; if the price of petrol increases as a result demand for cars decreases.

In case of substitute goods, the price of one good is directly related with the demand for other related good. For example, tea and coffee; if the price of coffee increases as a result demand for tea increases. So, there is a positive relationship between the price of one good and demand for the other good.