Question

If the price rises on olive oil and the quantity demanded of garlic drops, then these...

If the price rises on olive oil and the quantity demanded of garlic drops, then these two items are considered to be:

there is not enough information to make a determination.
complements
normal goods
substitutes

Homework Answers

Answer #1

Answer
Option 1
there is not enough information to make a determination


here, the price of one good and quantity demanded of other good is compared.


The relationship is negative but, the increase in the price of one decrease demand for other means complement goods.
Even though the decrease in demand decreases quantity demanded but it is not direct relationship with quantity as the quantity demanded only change with the change in price and not because of the change in the price of complement goods.
In lemon language there is no relationship between the price of a good and the quantity of other good, there is a possible relationship between the price of one good and demand of other good.
A relationship is positive means substitute goods, and a relationship is negative means complement goods.

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