The price of petrol falls from 100 Rs to 80 Rs resulting in increase in demand of vehicles from 10000 to 20000.
What type of goods are petrol and vehicles?
Answer & explanation
Correct answer: option 2
The correct answer is option 2: complementary goods
Petrol and vehicles are complementary goods.
Complementary goods are goods that are typically consumed together. When the price of one complementary good falls, the demand for both goods usually increases. In this case, a decrease in the price of petrol leads to an increase in the demand for vehicles, indicating that petrol and vehicles are used together.
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Substitute goods are goods that can replace each other. When the price of one substitute good falls, the demand for the other good decreases.
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Normal goods are those for which demand increases as income increases, regardless of the relationship between them.
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Luxury goods are high-end products that are not essential and are often bought when individuals have higher disposable incomes.