If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are ?
Correct answer: E. Substitutes
- A. Complements
- B. inferior goods
- C. normal goods
- D. none of these answers
- E. Substitutes
Explanation
A higher price for blue jeans increases demand for tennis shoes because consumers can switch between the two goods. Goods with this inverse cross-price relationship are substitutes, not complements.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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