Question

On average, about 3,500 new mobile homes are sold every month at an average price of $40,000. In 2013 average income in the United States rose and, all else equal, mobile home sales decreased. From the information given, it is reasonable to conclude that mobile homes:

Answer 1

Mobile homes are a substitute good.

Step-by-step explanation:

Substitute goods are goods in which one of them can be used instead of the other. Their demands are related, so if a variable changes, the demand for those goods will also change. Generally the variables that give way to these changes in demand are the price of the good or the income of the consumer.

In this case, the income of consumers increased, so the demand for mobile homes decreased, this means that mobile homes are a substitute for a standard house, that is, having more income consumers will replace mobile homes by standard houses being these more expensive.