If the price of tea rises and the demand for coffee increases, tea and coffee are most likely:
Correct answer: B. Substitute goods
- A. Complementary goods
- B. Substitute goods
- C. Inferior goods
- D. Public goods
Explanation
Substitute goods satisfy similar wants, so a higher price for tea shifts consumers toward coffee. Complementary goods are consumed together, so a higher price of one usually reduces demand for the other.
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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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