If an increase in the supply of good A decreases the demand for good B, then
A)the demands for A and B are independent.
B)the elasticity of supply for good A is greater than 1.
C)A and B are complements.
D)A and B are substitutes.
E)the demand for A is price elastic.

Question

Quizplus · Accepted Answer

If an increase in the supply of good A decreases the demand for good B, it means that A and B are substitutes. As the supply of A increases, people will switch from buying B to buying more of A, leading to a decrease in the demand for B. This shows that the two goods are seen as alternatives to each other.

If an Increase in the Supply of Good a Decreases