CA Foundation Exam > CA Foundation Questions > If price increase of good A increases the qua...
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If price increase of good A increases the quantity demanded of good B, then good B is a
- a)substitute good
- b)complementary good
- c)bargain
- d)inferior good
Correct answer is option 'A'. Can you explain this answer?
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If price increase of good A increases the quantity demanded of good B,...
Substitute Goods
Substitute goods are those goods that can be used as an alternative to each other. When the price of one substitute good increases, consumers tend to shift their demand towards another substitute good. Hence, if the price of good A increases, and it leads to an increase in the quantity demanded of good B, then good B is a substitute good.
Explanation
When the price of good A increases, consumers tend to shift their demand towards a substitute good B. This is because the substitute good B is now relatively cheaper than good A. Hence, the demand for good B increases. For example, if the price of coffee increases, consumers may shift their demand towards tea as a substitute. This will lead to an increase in the quantity demanded of tea.
Conclusion
In conclusion, if the price increase of good A increases the quantity demanded of good B, then good B is a substitute good. The increase in the demand for good B is due to the fact that it is a substitute for good A, and consumers shift their demand towards it when the price of good A increases.
Substitute goods are those goods that can be used as an alternative to each other. When the price of one substitute good increases, consumers tend to shift their demand towards another substitute good. Hence, if the price of good A increases, and it leads to an increase in the quantity demanded of good B, then good B is a substitute good.
Explanation
When the price of good A increases, consumers tend to shift their demand towards a substitute good B. This is because the substitute good B is now relatively cheaper than good A. Hence, the demand for good B increases. For example, if the price of coffee increases, consumers may shift their demand towards tea as a substitute. This will lead to an increase in the quantity demanded of tea.
Conclusion
In conclusion, if the price increase of good A increases the quantity demanded of good B, then good B is a substitute good. The increase in the demand for good B is due to the fact that it is a substitute for good A, and consumers shift their demand towards it when the price of good A increases.
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If price increase of good A increases the quantity demanded of good B,...
B is the substitute goods because there is direct relationship between A and B
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If price increase of good A increases the quantity demanded of good B, then good B is aa)substitute goodb)complementary goodc)bargaind)inferior goodCorrect answer is option 'A'. Can you explain this answer?
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