HomeQuestionsEconomicsComplementary Goods and Demand

Complementary Goods and Demand

This topic examines the relationship between complementary goods, specifically how the price change of one good, like muffins, influences the demand for another, such as coffee. The concept of cross-price elasticity is crucial here, as it quantifies this relationship, often resulting in a negative elasticity value that indicates an inverse relationship between the price of one good and the demand for its complement. Understanding these dynamics is essential for analyzing market behavior and predicting consumer responses to price changes.

17 practice questions with detailed explanations

17
Questions Available

Practice Questions

Click any question to see detailed solutions

1

If the price of printers decreases, how is the demand for ink cartridges likely to be affected, assuming they are complementary goods?

When printers cost less, more people buy them. Other options are incorrect because Some might think that if printers are cheaper, people won't need as...

easymultiple_choiceClick to view full solution
2

How does an increase in the price of one complementary good affect the demand curve of its pair in market analysis?

When the price of one complementary good goes up, people buy less of it. Other options are incorrect because Some might think that higher prices mean ...

mediummultiple_choiceClick to view full solution
3

How does the substitution effect influence the demand for complementary goods when the price of one good decreases?

When the price of one good goes down, people buy more of it. Other options are incorrect because Some might think that if one good is cheaper, people ...

mediummultiple_choiceClick to view full solution
4

If the price of printer paper decreases significantly, what is the most likely effect on the demand for printers, assuming printer paper and printers are complementary goods?

When printer paper costs less, more people will buy it. Other options are incorrect because Some might think that lower paper prices would make printe...

hardmultiple_choiceClick to view full solution
5

If the cross-price elasticity of demand between two goods is negative, what does this indicate about their relationship?

A negative cross-price elasticity means that when the price of one good goes up, the demand for the other good goes down. Other options are incorrect ...

hardmultiple_choiceClick to view full solution
6

Which of the following pairs of goods are considered complementary goods?

Cars and gasoline are complementary goods. Other options are incorrect because Some people think coffee and sugar are complementary; Bread and butter ...

easymultiple_choiceClick to view full solution
7

What happens to the demand curve of a complementary good when the price of its complement decreases?

When the price of a complementary good goes down, people buy more of it. Other options are incorrect because Some might think that lower prices mean l...

easymultiple_choiceClick to view full solution
8

How does the price elasticity of demand for a product typically affect the demand for its complementary goods?

When the price of a product goes up, people buy less of it. Other options are incorrect because This answer suggests that higher prices lead to more d...

easymultiple_choiceClick to view full solution
9

If the price of coffee increases, what is likely to happen to the demand for muffins?

When coffee costs more, people might buy less coffee. Other options are incorrect because Some might think that if coffee is more expensive, people wi...

mediumcase_studyClick to view full solution
10

If the price of muffins increases, what is the likely impact on the demand for coffee, which is a complementary good?

When muffins cost more, people buy fewer muffins. Other options are incorrect because Some might think that if muffins are more expensive, people will...

easycause_effectClick to view full solution
11

Arrange the following steps in the correct order to analyze the impact of a price increase in muffins on the demand for coffee, a complementary good.

Muffins and coffee are complementary goods. Other options are incorrect because Calculating cross-price elasticity comes later; You need to understand...

mediumorderingClick to view full solution
12

Which of the following statements correctly describe the relationship between complementary goods? Select all that apply.

Complementary goods are items that are used together. Other options are incorrect because This suggests that if muffins cost more, people will buy les...

easymultiple_correctClick to view full solution
13

When the price of muffins increases, the demand for coffee is likely to ______, indicating that these goods are complementary.

When muffins cost more, people buy fewer muffins. Other options are incorrect because Some might think that if muffins are more expensive, people will...

mediumfill_in_blankClick to view full solution
14

A local coffee shop notices that after increasing the price of their muffins, the demand for coffee has decreased significantly. Which of the following explanations best applies to this scenario regarding complementary goods?

When muffins cost more, people might not buy them and coffee together. Other options are incorrect because This answer suggests that higher muffin pri...

mediumscenario_basedClick to view full solution
15

If the price of coffee increases, what is likely to happen to the demand for muffins, and why?

When coffee prices go up, fewer people buy coffee. Other options are incorrect because This answer suggests that more coffee means more muffins; This ...

easyclassificationClick to view full solution
16

If the price of muffins increases, what is likely to happen to the demand for coffee?

Muffins and coffee are complementary goods. Other options are incorrect because This answer suggests that people will switch to coffee instead; This a...

hardmultiple_choiceClick to view full solution
17

Muffins:Coffee :: Cars:?

Muffins and coffee are often enjoyed together. Other options are incorrect because Bicycles are not needed for cars; Public transport is an alternativ...

hardanalogyClick to view full solution

Master Complementary Goods and Demand

Ready to take your understanding to the next level? Access personalized practice sessions, progress tracking, and advanced learning tools.