9. In 2003 the price of ‘home heating oil’ substantially increased during the harsh winter. In...
9. In 2003 the price of ‘home heating oil’ substantially increased during the harsh winter. In the eastern U.S., many homes use home heating oil. Just like filling up a car with gasoline, home heating oil must be put into a special tank that generates the power to heat the home. Prices rose so much that people began using cheaper fire logs as a back-up plan to heat their homes. Based on this information, what can we can say about the relationship of home heating oil ‘and’ fire logs:
A) Complementary goods - the higher price of home oil decreased the demand for fire logs.
B) Substitute goods - the higher price of home oil increased the demand for fire logs.
C) Complementary goods - the higher price of home oil decreased the supply of fire logs.
D) Substitute goods - the higher price of home oil did not affect the supply level of fire logs.
Homework Answers
Option B
Explanation: Substitute goods provide the same types of utilities. Also, in the case of substitute goods, when the price of one good increases, the demand for the other goes up.
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9. In 2003 the price of ‘home heating oil’ substantially
increased during the harsh winter. In...
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