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WAEC Economics 1988 Question 14

Question 14

Theory of Demand

When the price of commodity A increases, the demand for commodity B decreases, then A and B are

  1. A.close substitutes
  2. B.complementary goods
  3. C.supplementary goods
  4. D.giffen goods
  5. E.luxurious goods.
Show the answer and explanation

Answer: B (complementary goods)

Explanation

When A becomes dearer, people buy less A and therefore less of B which goes with it, so they are complementary (jointly demanded) goods. Substitutes would see demand for B rise.