If a 20 Percent Increase in the Price of One

question 98

Multiple Choice

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

• A) substitutes.
• B) normal.
• C) inferior.
• D) complements.

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Definitions:

Quantity Demanded

The quantity of a good that consumers are willing and able to purchase at a given price over a specified period of time.

CD Players

Devices used for playing audio CDs that were a popular technology for music playback before being gradually replaced by digital music players.

Elasticity

The measure of how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price or income.

Lowest Possible

This term needs more context to provide a specific definition; generally, it refers to the minimum achievable level or value in a given situation.