Question

When the price of milk rises, there is no change in the amount of dog food purchased. This is an example of:

A) Complementary Goods
B) Normal Goods
C) Inferior Goods
D) Independent Goods

Answer 1

The scenario where a price increase in milk does not change the quantity of dog food purchased indicates that milk and dog food are Independent Goods.

Step-by-step explanation:

When the price of milk rises, and there is no change in the amount of dog food purchased, this demonstrates that milk and dog food are Independent Goods. Independent goods are those where the price change of one good does not affect the demand for another, meaning they are not used together and the consumption of one does not enhance the consumption of the other. This is distinguished from complementary goods, where a price change in one would affect demand for the other, and normal goods, which see increased demand with increased income. When the price of one complementary good increases, it typically leads to a decrease in the demand for the other.