Question

Two commodities A and B can be inferred as close substitutes of each other if ______.

पर्याय

• Rise in price of one leads to an increase in demand of other and vice-versa

• Rise in price of one leads to a decrease in demand of other and vice-versa

• Fall in price of one lead to fall in demand of other one, but not the other way round

• Rise in price of one lead to rise in demand of other one, but not the other way round

Answer 1

Two commodities A and B can be inferred as close substitutes of each other if Rise in price of one leads to an increase in demand of other and vice-versa.

Explanation:

With substitutes, a rise in one good’s price increases demand for the other, and the relationship works both ways. Complementary goods instead have an inverse cross-price relationship.