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JAMB Economics 1979 Question 4

Question 4

Theory of Demand

If two commodities are good substitutes for one another, e.g. butter and margarine, an increase in the demand for one will reduce the demand for the other. This type of demand is called

  1. A.composite demand
  2. B.elastic demand
  3. C.derived demand
  4. D.competitive demand
  5. E.inelastic demand.
Show the answer and explanation

Answer: D (competitive demand)

Explanation

Substitutes compete with each other for buyers, so their demand is called competitive (rival) demand.