All of the following pairs of goods are substitutes except
Part 2
A.
we observe the price of automobiles decreases and the demand for public transit decreases.
B.
we observe the price of bacon increases and the demand for eggs decreases.
C.
we observe the price of coffee increases and the demand for tea increases.
D.
we observe the price of tennis racquets decreases and the demand for golf clubs decreases.
C.
why
The pair of goods mentioned in option C, which is coffee and tea, are actually complements rather than substitutes. This is because coffee and tea are often considered alternative choices for consumers when they want to satisfy their caffeine cravings. Therefore, when the price of coffee increases, people may switch to drinking tea instead, which would lead to an increase in the demand for tea.
All of the following pairs of goods are complements except
Part 4
A.
we observe the price of tennis racquets increases and the demand for tennis shoes decreases.
B.
we observe the price of bacon decreases and the demand for sausage increases.
C.
we observe the price of automobiles decreases and the demand for tires increases.
D.
we observe the price of coffee decreases and the demand for tea decreases.
D.
In all the other options (A, B, and C), we observe that as the price of one good increases, the demand for the other good decreases. This indicates that the goods are complements, satisfying the condition for complementarity. However, in option D, the price of coffee decreases, and the demand for tea also decreases. This implies that coffee and tea are substitutes rather than complements.
To determine which pairs of goods are substitutes, we need to identify situations where a decrease in price of one good leads to a decrease in demand for another good.
A. In this case, if the price of automobiles decreases, it is less likely to lead to a decrease in demand for public transit. Therefore, it is not a substitute situation.
B. If the price of bacon increases, it is likely to lead to a decrease in demand for eggs as people may prefer to consume bacon instead. This is a substitute situation.
C. If the price of coffee increases, it is likely to lead to an increase in demand for tea as people may switch to cheaper alternatives. This is also a substitute situation.
D. If the price of tennis racquets decreases, it is not likely to lead to a decrease in demand for golf clubs. Therefore, it is not a substitute situation.
Based on this analysis, the correct answer is A. we observe the price of automobiles decreases and the demand for public transit decreases, as it is not a substitute situation.
To determine which pairs of goods are substitutes, we need to analyze the relationship between the price of one good and the demand for another good. Substitutes are goods that can be used in place of each other, so when the price of one good increases, the demand for the other good typically increases. Conversely, when the price of one good decreases, the demand for the other good typically decreases.
Let's analyze each option:
A. When the price of automobiles decreases and the demand for public transit decreases. In this case, we observe a decrease in the demand for public transit, which indicates that automobiles are not substitutes for public transit. So, option A is a valid answer.
B. When the price of bacon increases and the demand for eggs decreases. In this case, we observe a decrease in the demand for eggs, which indicates that bacon is not a substitute for eggs. So, option B is a valid answer.
C. When the price of coffee increases and the demand for tea increases. In this case, we observe an increase in the demand for tea, which indicates that coffee is a substitute for tea. So, option C is not a valid answer.
D. When the price of tennis racquets decreases and the demand for golf clubs decreases. In this case, we observe a decrease in the demand for golf clubs, which indicates that tennis racquets are not substitutes for golf clubs. So, option D is a valid answer.
Therefore, the correct answer is option C, where we observe the price of coffee increases and the demand for tea increases.