Question

Select the statement which best describes the following term: Substitute: A. demand for one good and...

Select the statement which best describes the following term:

Substitute:

A. demand for one good and the price of the other are inversely related

B. demand for one good and price of the other are directly related

C. sum of all individuals demand curves

D. demand and income are inversely related

E. demand and income are directly related

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Homework Answers

Answer #1

Lets take an example:

There are two substitute goods: Coke And Pepsi. Both are available in the market.

If the price of the Coke goes up, then consumers will start purchasing more Pepsi as Coke become costly. So, the demand for Pepsi would go upl.

So, we see that the demand for one good (Pepsi) and the price of other good (Coke) are directly related to each other.

Hence, Option B. is correct

**if you liked the answer, then please upvote. Would be motivating for me. Thanks.

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