Satellite TV and cable TV have been rivals for years. These two products are known as _____.

• A. public goods
• B. inferior goods
• C. complements
• D. substitutes

Answer: (D)

Verified step by step guidance

1. Understand the definitions of the key terms: Public goods are non-excludable and non-rivalrous goods; inferior goods are goods for which demand decreases as income rises; complements are goods that are used together, so the demand for one increases when the price of the other decreases; substitutes are goods that can replace each other, so the demand for one increases when the price of the other increases.
2. Identify the relationship between Satellite TV and Cable TV: Since they serve similar purposes and consumers typically choose one over the other, they compete in the market.
3. Analyze the nature of their competition: If the price of Satellite TV rises, consumers might switch to Cable TV, and vice versa, indicating that they can replace each other.
4. Conclude that Satellite TV and Cable TV are substitutes because they fulfill similar needs and the demand for one is affected by the price changes of the other.
5. Remember that this classification helps in understanding consumer choice and market dynamics between competing products.