Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and Y are ?
Correct answer: B. complements
- A. perfect substitutes
- B. complements
- C. unrelated goods.
- D. substitutes.
Explanation
If the price of Y falls and demand for Z rises, consumers are likely using Y and Z together, so they are complements. Substitutes would show the opposite relationship: a fall in Y's price would reduce demand for Z.
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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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