Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

In the locality of Pitampura, the price of sugar is Rs.60 per kg and that of tea leaves is Rs. 50 per kg. One day, the price of sugar rose from Rs. 60 to Rs. 70 per kg. This will show some impact on the demand of sugar.
According to you, what will be the relation between price of sugar and demand for tea leaves?

Options:

Same

Opposite

No relation

None of the above

Correct Answer:

Opposite

Explanation:

Since tea and sugar are used together, an increase in the price of sugar is likely to decrease the demand for tea leaves and a decrease in the price of sugar is likely to increase the demand for tea leaves. They are complementary goods and used together.