Association of Chartered Certified Accountants (ACCA) Certification Practice Test 2025 - Free ACCA Practice Questions and Study Guide

Substitutes and complements are crucial concepts in understanding how demand works in economics. Substitutes are goods that can replace each other, meaning that if the price of one rises, consumers might buy more of the other. For example, if the price of coffee goes up, people might buy more tea instead. This relationship directly affects the quantity demanded for these goods; if consumers are switching from one to the other due to changes in price or preference, the demand for those goods will move in response.

Complements, on the other hand, are goods that are consumed together. A classic example is printers and ink cartridges. If the price of printers decreases, making them more affordable, the quantity demanded for ink cartridges is likely to increase as well. Changes in the demand for one good due to price changes or changes in consumer preferences thus affect the quantity demanded for its complement.

By understanding these relationships, one can see how shifts in demand for one good can lead to shifts in demand for another, which underscores why the correct answer is that substitutes and complements affect the quantity demanded for goods. Choices that relate to production levels, pricing strategies, or the supply curve pertain to a different aspect of the market dynamics and do not directly address how demand interacts with substitutes