Asked by Glenda Gonzalez on May 19, 2024
Verified
In 2007,the price of oil increased,which in turn caused the price of natural gas to rise.This can best be explained by saying that oil and natural gas are:
A) complementary goods and the higher price for oil increased the demand for natural gas.
B) substitute goods and the higher price for oil increased the demand for natural gas.
C) complementary goods and the higher price for oil decreased the supply of natural gas.
D) substitute goods and the higher price for oil decreased the supply of natural gas.
Substitute Goods
Products or services that can be used in place of each other by consumers.
Price of Oil
The amount of money required to purchase a barrel of oil, influenced by global supply and demand, geopolitical events, and other factors.
Natural Gas
Natural gas is a fossil fuel consisting mainly of methane and other hydrocarbons, used as a source of energy for heating, cooking, and electricity generation.
- Recognize and differentiate substitute goods from complementary goods.
Verified Answer
ES
Elinor ShwartzMay 20, 2024
Final Answer :
B
Explanation :
Oil and natural gas are substitute goods, meaning that they can be used interchangeably for many purposes. When the price of oil increases, consumers and businesses may choose to switch to natural gas as a cheaper alternative. This increases the demand for natural gas, causing its price to rise as well.
Learning Objectives
- Recognize and differentiate substitute goods from complementary goods.