A reduction in the price of good A reduces the consumption of good B,then ________.
A) A and B are substitutes.
B) A and B are complements.
C) A is a normal good.
D) A is an inferior good.

Question

Quizplus · Accepted Answer

When the price of a substitute good (such as good A) decreases, consumers tend to buy more of it, and less of the other substitute good (such as good B). This is because consumers will switch to the cheaper substitute good, rather than paying more for the other one. Therefore, A and B are substitutes.

A Reduction in the Price of Good a Reduces the Consumption