The number of computers bought increased by 20 percent when the price of on-line services declined by 10 percent. Assuming other factors are held constant, computers and on-line services are classified as:
A) complements.
B) unrelated goods.
C) substitutes.
D) social goods.

Question

Quizplus · Accepted Answer

When the price of on-line services decreased, the demand for computers increased, indicating that the two goods are complements. Complements are goods that are consumed together, where the price change of one good affects the demand for the other in the opposite direction. In this case, on-line services and computers are consumed together, and a decrease in the price of on-line services caused an increase in the demand for computers.

The Number of Computers Bought Increased by 20 Percent When