If an increase in the price of gasoline decreases the demand for tires,it indicates that _____
A)the two goods are substitutes.
B)the two goods are complements.
C)Coke is a substitute and Pepsi is a complement.
D)Pepsi is a substitute and Coke is a complement.
E)the two goods are income elastic.

Question

Quizplus · Accepted Answer

Gasoline and tires are complements because an increase in the price of gasoline (used for cars) leads to a decrease in the demand for tires, indicating that they are used together. When the use or consumption of one good decreases because the price of another related good increases, those goods are considered complements.

If an Increase in the Price of Gasoline Decreases the Demand