A Level Economics AQA Practice Exam

Joint demand occurs in which type of goods?

1. Normal goods

2. Substitutes

3. Complementary goods

4. Luxury goods

The correct answer is: Complementary goods

Joint demand occurs when two or more goods are used together to satisfy a particular want or need. Complementary goods are those that typically enhance each other's utility when consumed together. For example, coffee and sugar are complementary goods; if the demand for coffee rises, the demand for sugar will likely increase as well, because they are often purchased together. In contrast, normal goods, substitutes, and luxury goods do not intrinsically define a relationship where the consumption of one leads to an increase in the demand for another in a complementary fashion. Normal goods simply refer to goods for which demand increases as income rises, substitutes are goods that can replace each other in consumption, and luxury goods are those that have a more than proportional increase in demand as consumer income rises. Thus, joint demand specifically characterizes the relationship seen with complementary goods.