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. - Correct - CDs and CD players are positively related

B. An increase in the demand for butter results in an increase in the demand for margarine. - Incorrect - in general , a person consumes only one of these

C. A decrease in the demand for notebooks results in an increase in the demand for notebook bags. - Incorrect - not positive relation since one has decreased whereas the other has increased

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

E. A decrease in the demand for cable television results in an increase in the demand for satellite antennas. - Incorrect - same as C

Answer A