Question

If with the rise in price of good $Y$, demand for good $X$ rise, the two goods are: (Choose the coorect alternative)

• A. Substitutes
• B. Complements
• C. Not related
• D. Jointly demanded

Answer 1

The correct option is A Substitutes

If with the rise in price of good $Y$, demand for good $X$ rises, the two goods are said to be substitutes. This is because substitute goods are the ones which are consumed in place of each other. For instance, tea and coffee. Thus, if the price of one good rises, the demand for other substitute good will rise.

Hence, the correct answer is option (a).