Cell phone data plans are most useful when used with a smartphone, and smartphones are most useful when used with a data plan. As the price of data plans falls, the demand for smartphones will:
A) decrease, because smartphones and data plans are substitutes.
B) increase, because smartphones and data plans are complements.
C) decrease, because smartphones and data plans are complements.
D) increase, because smartphones and data plans are substitutes.

Question

Quizplus · Accepted Answer

Smartphones and data plans have a complementary relationship, meaning that they are consumed together. As the price of data plans falls, more people will be able to afford them, which will increase their demand for smartphones that can fully utilize the benefits of the data plan. Therefore, the demand for smartphones will increase as the price of data plans falls.

Cell Phone Data Plans Are Most Useful When Used with a Smartphone