Multiple choice

When the price of good X rises, demand for good Y rises. X and Y are

  1. inferior goods

  2. complementary goods

  3. substitute goods

  4. normal goods

  5. branded goods
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Substitutes are those goods which can be used with ease in place of one another. For example, tea and coffee, ink pen and ball pen, are substitutes for each other and can be used in place of one another easily. When goods are substitutes, a fall in the price of one leads to a fall in the quantity demanded of its substitutes. They have positive cross elasticity of demand. This is the correct answer.

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