The price of petrol falls from 100 Rs to 80 Rs resulting in increase in demand of vehicles from 10000 to 20000.
If the price of the above goods increases, what will be the effect on demand?
Answer & explanation
Correct answer: option 3
Petrol and vehicles are complementary goods. Complementary goods are those goods who adds to the value of the other commodity. So, a car is incomplete without petrol in it. Thus, we can say that they are complementary goods. Few more examples include: pen and ink, bat and ball etc. When price of one commodity increases, the demand for the complimentary good decreases and vice-versa