An increase in the price of good B resulting from a decrease in the supply of B caused an increase in the demand for good C.This indicates that goods B and C are
A) complements.
B) substitutes.
C) neither substitutes nor complements.
D) normal goods.

Question

Quizplus · Accepted Answer

If there is a decrease in supply of good B, its price will increase. As a result, customers of good B will shift their preference towards a substitute good with a lower price, which is good C. This means that good B and good C are substitutes, and an increase in the price of good B led to an increase in the demand for good C.

An Increase in the Price of Good B Resulting from a Decrease