by
Jay Fresnido , Total Rewards Analyst (Assistant Manager Level) , Al Futtaim Group
Answer (A - Margarine and butter) is correct. Goods or services are complements if the price change of one has an inverse relationship to the demand for the other. For example, when the price of one good increases, the demand for a complementary good decreases. Margarine and butter, however, are substitutes and their relationship is direct. When the price of one good increases, demand for a substitute good also increases.
by
Kokab Rahman , Managing Director, Head of Business Development , Radeya Business Services http://www.radeya.biz
Margarine and butter are not complimentary goods. They are substitutes. If the price of butter increases then demand for margarine increases because people will use it in place of butter.
Complimentary goods are those that are used together, such as VCRs and video cassettes. Another example is Coffee and sugar. An increase in coffee intake increases demand for sugar.
