Question

The Smith family eats both meat and potatoes on a regular basis and we need to know how the family views these goods. If the price of meats rises and the family eats more potatoes, then the two goods must be a. Substitutes b. Complements c. Inferior d. Normal

Answer 1

Here, the option (a) substitutes is correct answer.

Now we'll understand why patatoes and meat are substitutes in this question.

Substitute goods : Those goods which, replace each other in the use with the result of changed condition.

In this question the Smith family used to eat both potatoes and meat.

But, with the increase in meat's price the Smith family totally moved to the potatoes and eat more of them instead of meat.

So, in this question Smith family uses the potatoes as a substitute of meat.

At last we can say that potatoes and meat are substitutes to each other or substitute goods.