Multiple choice

Which of the following statements is false?

  1. When commodities are complementary to each other, fall in price of one (other things being equal) will cause demand of another to rise.

  2. When commodities are complementary to each other, fall in price of one (other things being equal) will cause the demand of another to fall.

  3. When goods are substitutes, fall in the price of one (other things being equal) leads to fall in the quantity demanded of its substitute.

  4. When goods are substitutes, a rise in the price of one (Other things being equal) leads to rise in the quantity demanded of its substitute.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Complementary goods are those goods, which are consumed together or simultaneously, e.g. tea & sugar, automobile & petrol. When commodities are complementary, a fall in the price of one (other things being equal) will cause the demand of the another to rise.

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