If the price of commodity X rises and consumers shift to commodity Y, then commodities X and Y are

Step 1: Analyze the question The price of X goes up, and consumers respond by buying Y instead. We need to name the relationship between X and Y.

Step 2: The concept The relationship between two goods is measured by cross elasticity of demand (how demand for one good responds to a price change in another):

• Substitutes: goods that can replace each other (e.g. Indomie and spaghetti, or Peak milk and Cowbell milk). If the price of one rises, demand for the other rises. Cross elasticity is positive.
• Complements: goods used together (e.g. car and petrol, bread and butter). If the price of one rises, demand for the other falls. Cross elasticity is negative.
• Inferior goods: goods whose demand falls when consumers' income rises. This concerns income, not the price of another good.

Step 3: Apply it

• Price of X rises, so demand for X falls.
• Consumers move to Y, so demand for Y rises.
• Both prices and demand move in the same direction (X's price up, Y's demand up). This is the pattern of substitutes.

Step 4: Check the other options

• B. Complements: would mean demand for Y falls when X gets expensive. This is wrong.
• C. Inferior goods: this depends on income changes, not a price change in another good. This is wrong.
• D. Bought together: this is just another way of describing complements. This is wrong.

Answer: A. Substitutes

Exam tip: Ask yourself, "When X gets expensive, do people run to Y or abandon Y too?" If they run to Y, the goods are substitutes. If they abandon Y too, they are complements. Remember: Substitute = Switch.