-In the Above Figure, the Demand Curve for Good a Shifts

question 255

Multiple Choice

-In the above figure, the demand curve for Good A shifts from D₁ to D₂ in Graph A when the price of Good B changes from P₁ to P₂ in Graph B. We can conclude that

• A) Good A and Good B are substitutes.
• B) Good A and Good B are complements.
• C) Good A is a normal good but Good B is an inferior good.
• D) Good A and Good B are unrelated.

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Definitions:

Present Value

The present value of a future amount of money or series of cash flows, considering a particular return rate.

Interest Rate

The percentage of the principal charged by a lender for the use of its money or the rate at which interest is paid by a borrower for the use of money.

Consumes

The action of using up a good or service, typically resulting in a decrease in available quantity.

Consumption

The use of goods and services by households. It is an important component of GDP and a direct indicator of consumer spending behavior.