How can the demand for one good be affected by increased demand for another one?

Question

A.
When goods are bought together, increased demand for one will decrease demand for the other.

B.
A drop in price for a good will increase demand for the good and its substitute.

C.
If goods are substitutes for each other, increased demand for one will increase demand for the other.

D.
If goods are used together, increased demand for one will increase demand for the other.

Answer 1

The correct answer is:

D. If goods are used together, increased demand for one will increase demand for the other.

This option reflects the relationship between complementary goods, which are goods that are used together. When the demand for one increases, it often leads to an increase in demand for the other as well.

Option A is incorrect because it suggests that increased demand for one good will decrease demand for another, which generally applies to substitutes rather than complementary goods.

Option B is also incorrect; a drop in price for one good may increase its demand but typically would not increase demand for its substitute.

Option C is incorrect because if goods are substitutes, increased demand for one usually leads to a decrease in demand for the other, not an increase.