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Question
If due to fall in the price of good X, demand for Y rises, the two goods are ______.
Options
Substitutes
Complements
Not related
Competitive
Solution
If due to fall in the price of good X, demand for Y rises, the two goods are complements.
If the demand for good Y rises due to a fall in the price of good X, it indicates that the two goods are complements. Complementary goods are typically used together, so a decrease in the price of one leads to an increase in the demand for the other. For example, if the price of printers (good X) falls, the demand for ink cartridges (good Y) may rise, as more people buy printers and also need cartridges.
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