An increase in the price of butter causes an increase in the demand for margarine. This indicate that butter and margarine are?
-
substitute goods
- complementary goods
- elastic goods
- inelastic goods
- inferior goods
The correct answer is: A
Explanation
A substitute good is a good that can be used in place of another. In consumer theory, substitute goods or substitutes are products that a consumer perceives as similar or comparable, so that having more of one product makes them desire less of the other product. Formally, X and Y are substitutes if, when the price of X rises, the demand for Y rises.