rises
falls
remains unchanged
all of the above are possible
Answer is Right!
Answer is Wrong!
The correct answer is: B. falls
A substitute is a good or service that can be used in place of another good or service. For example, coffee and tea are substitutes. If the price of coffee rises, people may switch to drinking tea instead. A complement is a good or service that is used together with another good or service. For example, cars and gasoline are complements. If the price of gasoline rises, people may drive less, which will reduce the demand for cars.
When both the price of a substitute and the price of a complement of commodity X rise, the demand for X will fall. This is because people will be more likely to switch to other goods or services that are now relatively cheaper.
Here is a more detailed explanation of each option:
- Option A: The demand for X rises. This is not possible, because when the price of a substitute rises, the demand for X falls.
- Option B: The demand for X falls. This is the correct answer, as explained above.
- Option C: The demand for X remains unchanged. This is not possible, because when the price of a substitute rises, the demand for X must fall.
- Option D: All of the above are possible. This is not possible, because only option B is possible.