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If the quantity of good A increases because the price of good B (a related commodity)...

If the quantity of good A increases because the price of good B (a related commodity) decreases, how are the two commodities related? Explain. Use the movements”and shifts in demands for the two commodities.   

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Answer #1

Good A and Good B are substitute goods because the rise in the price of good B caused an increase in the quantity of good A. With the rise in the price of Good B, people will shift their demand towards good A.

This will cause a rightward shift in the demand curve of good A because the demand rose due to the change in the price of good B. Also, the demand curve of good B shows upward movement along the curve because demand of B will fall due to rise in price of good B.

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