Asked by
Linda Estrella
on Oct 26, 2024
Verified
The price of coffee increases by 10%,and as a result,Alex purchases fewer doughnuts.For Alex,coffee and doughnuts are:
A) complements.
B) substitutes.
C) inferior goods.
D) normal goods.
Inferior Goods
Goods for which demand decreases as consumer income rises, opposite to normal goods.
Normal Goods
Goods for which demand increases as consumer income rises, and decreases as consumer income falls.
Complements
Goods or services that are often used together, where an increase in demand for one leads to an increase in demand for the other.
- Get familiar with the concepts of income elasticity of demand and cross-price elasticity of demand, and their association with the classification of goods into normal, inferior, substitutes, or complements.
- Connect the principles of elasticity to real-life instances where changes in price impact the demand or supply of goods.
Verified Answer
MA
Learning Objectives
- Get familiar with the concepts of income elasticity of demand and cross-price elasticity of demand, and their association with the classification of goods into normal, inferior, substitutes, or complements.
- Connect the principles of elasticity to real-life instances where changes in price impact the demand or supply of goods.
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