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Demand levels for some categories of products are closely in

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Demand levels for some categories of products are closely in

by BTGmoderatorDC » Mon May 27, 2019 4:36 am

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Demand levels for some categories of products are closely interdependent. When one type of a product can serve as a complement for another product, the levels of demand for these goods are positively related. An increase in the demand for one product usually increases the demand for its complementary product. Similarly, a decrease in the demand for one good causes a decrease in the demand for its complementary product.

Which of the following statements provides an example of the relationship between product demands described above?


A. A decrease in the demand for CD players results in a decrease in the demand for CD`s.

B. An increase in the demand for butter results in an increase in the demand for margarine.

C. A decrease in the demand for notebooks results in an increase in the demand for notebook bags.

D. An increase in the demand for toothpaste results in an increase in the demand for cellular phones.

E. A decrease in the demand for cable television results in an increase in the demand for satellite antennas.

OA A

Source: Manhattan Prep
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by deloitte247 » Mon Jun 03, 2019 5:05 am

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OPTION A - CORRECT
Due to the fact that a CD player is used to play CD's, it is logical and appropriate to cite the CD player and CD as an example for the relationship between product demand as mentioned in the argument.

OPTION B - INCORRECT
The product butter and margarine are quite alike, and they are not closely interdependent.

OPTION C - INCORRECT
To use a notebook, you don't need a notebook bag; these two products do not complement each other, so, when there is a decrease in the demand for notebook bags, it doesn't mean that there will be a decline in the demand of notebooks.

OPTION D - INCORRECT
Toothpaste is used for cleaning the mouth, while a cellphone is used for distant communication. They do not relate or complement each other in any way. This shows that an increase in the demand for toothpaste does not mean an increase in the demand for cell phone.

OPTION E - INCORRECT
These products can't work together, it's either you use the cable television or the satellite antenna. They do not complement each other because, instead of the decrease in the demand for cable to result to decrease in demand for satellite antenna, the reverse is the case. The decrease in cables led to an increase in the demand of antennas, which is in opposition to the concern of the argument.
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