If an increase in the price of bicycles leads to an increase in the demand for bus transportation,the bicycles and bus rides must be
A)Substitutes
B)Complements
C)Normal goods
D)Inferior goods
E)Standardized products

Question

Quizplus · Accepted Answer

When an increase in the price of bicycles leads to an increase in the demand for bus transportation, it indicates that the two products are substitutes for each other. In other words, when the price of one product increases, consumers switch to the other product as a replacement. This suggests that the demand for bus transportation is affected by the price changes in bicycles, and vice versa, implying that the two products have a substitution effect on each other. Therefore, the best choice is A) Substitutes.

If an Increase in the Price of Bicycles Leads to an Increase