Question

If the demand for good Y increases as the price of good X decreases, it can be concluded that


X and Y are substitute goods


a

X and Y are complementary goods


b

X is an inferior good and Y is a superior good


c

X is a superior good and Y is an inferior good


d

both X and Y are inferior goods


e

Answer 1

b

If the price of X falls and demand for Y rises, X and Y are complements — they are consumed together. (Cross-price elasticity < 0.)