Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
As the price of muffins rises, consumers buy less coffee because they are less likely to purchase both items together.
B
The price increase of muffins makes coffee more desirable, leading to an increase in coffee demand.
C
The demand for coffee is unaffected by the price of muffins, as they are considered substitute goods.
D
Consumers are simply buying more muffins and coffee together despite the price increase of muffins.
Understanding the Answer
Let's break down why this is correct
Answer
Complementary goods are products that are often used together, meaning that if the price of one goes up, the demand for the other can go down. In this case, the coffee shop increased the price of their muffins, which led to fewer people buying them. Since muffins and coffee are typically consumed together, when people buy fewer muffins, they also tend to buy less coffee. This shows that the higher price of muffins has made customers less interested in getting coffee, demonstrating how changes in the price of one complementary good can affect the demand for another. For example, if a customer usually buys a muffin with their coffee but now finds the muffin too expensive, they might decide to skip the coffee too.
Detailed Explanation
When muffins cost more, people might not buy them and coffee together. Other options are incorrect because This answer suggests that higher muffin prices make coffee more wanted; This answer says muffins and coffee are substitutes, meaning people switch between them.
Key Concepts
Complementary Goods
Demand Elasticity
Cross-Price Elasticity
Topic
Complementary Goods and Demand
Difficulty
medium level question
Cognitive Level
understand
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