We observe that people buy less steak and more potatoes when the price of steak relative to potatoes increases. This indicates that steak and potatoes are
A) substitutes.
B) complements.
C) inferior goods.
D) unrelated goods.

Question

Quizplus · Accepted Answer

As the price of steak increases, people switch to buying potatoes instead, indicating that the two goods are substitutes - they can be used in place of each other to satisfy a similar need or want. This means that an increase in the price of one good leads to an increase in the demand for the other good.

We Observe That People Buy Less Steak and More Potatoes