Question

Write the meanings of

(i) Substitute goods
(ii) Complementary goods
(iii) Normal goods

(iv) Inferior goods
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Answer 1

Answer:

i) substitute good is a good that can be used in place of another

ii) complementary good is a good whose appeal increases with the popularity of its complement

iii) normal good is any good for which demand increases when income increases, i.e. with a positive income elasticity of demand.

iv) an inferior good is a good whose demand decreases when consumer income rises.