SCENARIO 3.1: Cappuccino and Frappuccino are substitutes. Cappuccino and Biscuit are complements. People buy Cappuccino more often in the Winter than in the summer. Refer to Scenario 3.1. if we increase the production of Cappuccinos, ceteris paribus, what will happen? O The price of Cappuccino will decrease, and price of Frappuccino will increase. O The price of Cappuccino and the price of Frappuccino will decrease. The price of Cappuccino and the price of Frappuccino will increase. The price of Cappuccino will increase, and the price of Frappuccino will decrease.

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.