A and B Are Substitute Goods, but a and C

question 57

Multiple Choice

A and B are substitute goods, but A and C are complementary goods (in consumption) .If the costs of production of A decrease, then the demand for:

• A)both B and C will decrease.
• B)both B and C will increase.
• C)B will increase and the demand for C will decrease.
• D)B will decrease and the demand for C will increase.

---

Definitions:

Gallon of Milk

A unit of measurement for liquid volume, specifically used to measure the quantity of milk.

Nominal Exchange Rate

The value of one currency in terms of another currency without adjustment for inflation or purchasing power parity.

Real Exchange Rate

A measurement of the value of one currency against another, adjusted for inflation, giving a more accurate representation of purchasing power between two countries.

British Pounds

The official currency of the United Kingdom, also known as sterling.