ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A and B are substitutes
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A and B are complements
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B is a substitute for A, but A is a complement to B.
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A is a substitute for B, but B is a complement to A.
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Detailed explanation-1: -The law of demand tells us that more of good A will be purchased by moving down the demand curve. In other words, the quantity demanded for good A will increase. Since goods A and B are complementary, more good A requires the use of more good B.
Detailed explanation-2: -The law of demand states that, other things being equal, when the price of a good rises, the quantity demanded of that good falls. The reverse is also true-when the price of a good falls, the quantity demanded of that good rises.
Detailed explanation-3: -If the price of a good falls, the quantity demanded of that good increases. The relationship between the quantity demanded and the price of a good when all other influences on buying plans remain the same. Demand is a list of quantities at different prices and is illustrated by the demand curve.
Detailed explanation-4: -Nearly all demand curves share the fundamental similarity that they slope down from left to right, embodying the law of demand: As the price increases, the quantity demanded decreases, and, conversely, as the price decreases, the quantity demanded increases.
Detailed explanation-5: -Inverse Relationship of Price and Demand The price of a good or service in a marketplace determines the quantity that consumers demand. Assuming that non-price factors are removed from the equation, a higher price results in a lower quantity demanded and a lower price results in higher quantity demanded.