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Question
If with the rise in price of good Y, demand for good X rises, the two goods are:
Options
Substitutes
Complements
Not related
Jointly
Solution
Substitutes
Explanation:
If the demand for good X rises with an increase in the price of good Y, it indicates that the two goods are substitutes. Substitute goods are those that can be used in place of each other. When the price of one good increases, consumers tend to buy more of the other good, which is now relatively cheaper. For example, if the price of tea (good Y) rises, the demand for coffee (good X) might increase as consumers switch to the cheaper alternative.
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