Which term describes goods that are often consumed together, where the demand for one increases the demand for another?

The correct term for goods that are often consumed together, where the demand for one increases the demand for another, is complementary goods. When two goods are complementary, the usage of one enhances the consumption of the other. For example, if more people start buying smartphones, the demand for accessories like phone cases and chargers typically increases as well.

This relationship occurs because the goods work in conjunction; the use of one good increases the utility derived from using the other. Concepts such as price elasticity can further describe how the changes in the price of one good affect the demand for its complement. Understanding this interaction is key to grasping consumer behavior and market dynamics.

In contrast, substitute goods are those that can replace one another, so an increase in the price of one would generally lead to an increase in the demand for the other, rather than any complementary relationship. Normal and inferior goods relate to income changes and consumer preferences rather than the interdependent consumption seen in complementary goods.