Mary decreases her consumption of Good X after the price of Good Y decreased. For Mary
A)Good X and Good Y are substitutes.
B)Good X and Good Y are complements.
C)Good X is an inferior good.
D)Good Y is an inferior good.

Question

Quizplus · Accepted Answer

The decrease in the price of Good Y caused Mary to switch to consuming more of Good Y instead of Good X, indicating that the two goods are substitutes - a decrease in the price of one leads to an increase in the demand for the other. This would not be the case if they were complements, as a decrease in the price of one would lead to a decrease in the demand for the other. Neither Good X nor Good Y is necessarily inferior goods based on this information.

Mary Decreases Her Consumption of Good X After the Price