An increase in the price of socks is likely to decrease the demand for shoes and a decrease in the price of socks is likely to increase the demand for shoes. Socks and shoes are:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Complementary goods.
When two goods are used together, an increase in the price of one reduces the demand for the other, and a decrease in the price of one increases the demand for the other. Such goods are called complementary goods. In this case, socks and shoes are used together.
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If the price of socks increases, people buy fewer socks, and consequently, they also buy fewer shoes.
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If the price of socks decreases, people buy more socks, and hence, more shoes too.