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If an increase in the price of product x causes the demand for product z to decrease, then product z is:

1) normal good
2) complementary good
3) inferior good
4) substitute good

1 Answer

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Final answer:

Product z is a complementary good because an increase in the price of product x causes a decrease in its demand, indicating they are typically used together.

Step-by-step explanation:

If an increase in the price of product x causes the demand for product z to decrease, then product z is a complementary good. This is because complementary goods are products that are typically used together, so if the price of one increases and leads to a decrease in demand for the other, it suggests a direct relationship between their uses. For example, if coffee prices go up, and as a result the demand for sugar decreases due to people buying less coffee, sugar can be considered a complementary good to coffee.

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