📚 Learning Guide
Complementary Goods and Demand
medium

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.

Master this concept with our detailed explanation and step-by-step learning approach

Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
Explore Topic

Choose the Best Answer

A

Recognize that muffins and coffee are complementary goods

B

Calculate the cross-price elasticity of demand

C

Determine the price increase of muffins

D

Predict the decrease in demand for coffee

Understanding the Answer

Let's break down why this is correct

Answer

To analyze how a price increase in muffins affects the demand for coffee, we start by understanding that muffins and coffee are complementary goods, meaning they are often consumed together. When the price of muffins goes up, fewer people may want to buy them because they are more expensive. As a result, since people usually enjoy coffee with their muffins, the demand for coffee is likely to decrease as well. For example, if a café raises the price of muffins, customers might decide to buy fewer muffins and, consequently, buy less coffee too. This shows how the price change of one good can influence the demand for another good that is closely related.

Detailed Explanation

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

Key Concepts

Complementary Goods
Cross-Price Elasticity
Market Behavior
Topic

Complementary Goods and Demand

Difficulty

medium level question

Cognitive Level

understand

Ready to Master More Topics?

Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.