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If goods are _______________ for each other, a change in the price of one of the goods will lead to a change in the demand for the other good. What is the missing word?

1 Answer

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Final answer:

The missing word is either 'substitutes' or 'complements' depending on whether the goods can replace each other or are used together.

Step-by-step explanation:

If goods are substitutes or complements for each other, a change in the price of one of the goods will lead to a change in the demand for the other good. When two goods are complements, they are used together, and a decrease in the price of one leads to an increase in demand for the other. For example, if the price of bread decreases, the demand for peanut butter might increase. On the other hand, if goods are substitutes, they can replace each other, and a decrease in the price of one good can lead to a decrease in demand for its substitute. For instance, if plane tickets become cheaper, fewer people might demand train tickets.

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User Jtoberon
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