Question

If price of good ‘X’ rises and it leads to a fall in demand for good ‘Y’, then the two goods are ______.

Options

• Substitute goods

• Complementary goods

• Normal goods

• Inferior goods

Answer 1

If price of good ‘X’ rises and it leads to a fall in demand for good ‘Y’, then the two goods are Complementary goods.

Explanation:

For complementary goods, a price rise in one reduces demand for the other because they are used together. A rise in a substitute’s price would instead increase demand for the given good.