Identify the false statement about economic relationships between goods (complements and substitutes).

Question

ScanSolve AI Tutor · Accepted Answer

This question asks to identify the false statement among the given options regarding economic relationships between goods (complements and substitutes).

Define complements and substitutes.
- Complements are goods that are typically consumed together. An increase in the price of one good will lead to a decrease in demand for the other.
- Substitutes are goods that can be used in place of each other. An increase in the price of one good will lead to an increase in demand for the other.
Evaluate each statement.
- A. Motor vehicles and petrol are complements. Motor vehicles need petrol to operate, so they are consumed together. This statement is true.
- B. Bank cards and cash are substitutes. Both bank cards (debit/credit) and cash serve as means of payment, and one can often be used instead of the other. This statement is true.
- C. Honey and jam are complements. Honey and jam are both spreads that can be used on bread or toast. They are typically used instead of each other, making them substitutes, not complements. This statement is false.
- D. A house and furniture are complements. Furniture is used to furnish a house, and they are often consumed together to create a functional living space. This statement is true.
- E. Butter and margarine are substitutes. Butter and margarine are both spreads used for similar purposes, and one can be used in place of the other. This statement is true.
Identify the false statement.
Based on the evaluation, statement C is false.

The correct option is C).
$\boxed{\text{C. Honey and jam are complements.}}$

Identify the false statement about economic relationships between goods (complements and substitutes).

Answer

Step-by-step solution

Define complements and substitutes.

Evaluate each statement.

Identify the false statement.

Try one yourself

Still stuck on this one?

More Economics Questions