Question

When the price of good A rises, the supply curve of good B shifts rightward. Which...

When the price of good A rises, the supply curve of good B shifts rightward. Which of the following statements are true? A) A and B are substitutes. B) A and B are complements. C) A and B are substitutes in production. D) A and B are complements in production. E) A is a factor used in the production of B.

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Answer #1

As the price of good A rises, rational consumer will consume less of good A and will shift to it's substitute so consumer will consumer more of good B ( which is substitute of good A) hence the supply curve of good B will shift Rightward.

For example if price of tea rises then consumer will shift to it's substitute which is coffee and hence he will purchase more of coffee, supply of coffee will increase (supply curve will shift to right)

Option B is correct

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