SSC
GENERAL ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is a complement?
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When the price of one good increases, the demand for the other decreases
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When the price of one good increases, the price of the other increases
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When the demand of one good increases, the price of the other decreases
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When the supply of one good increases, the demand of that good increases
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Explanation:
Detailed explanation-1: -Complementary goods will have a negative cross elasticity of demand. If the price of one good increases, demand for both complementary goods will fall. The more closely linked the goods are, the higher will be the cross elasticity of demand.
Detailed explanation-2: -The prices of complementary or substitute goods also shift the demand curve. When the price of a good that complements a good decreases, then the quantity demanded of one increases and the demand for the other increases.
Detailed explanation-3: -An increase in the price of a good will decrease demand for its complement while a decrease in the price of a good will increase demand for its complement.
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