Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Demand for muffins will decrease because they are complementary goods.
B
Demand for muffins will increase because consumers will buy more coffee.
C
Demand for muffins will remain unchanged because they are unrelated.
D
Demand for muffins may decrease if consumers switch to tea instead.
Understanding the Answer
Let's break down why this is correct
Answer
When the price of coffee increases, the demand for muffins is likely to decrease. This happens because coffee and muffins are considered complementary goods, meaning they are often consumed together. If people have to pay more for coffee, they may choose to buy less of it, which means they will also buy fewer muffins since they usually enjoy them with their coffee. For example, if a customer normally buys a cup of coffee and a muffin together but finds the coffee too expensive, they might skip the muffin as well. Therefore, an increase in the price of one complementary good can lead to a decrease in the demand for the other.
Detailed Explanation
When coffee prices go up, fewer people buy coffee. Other options are incorrect because This answer suggests that more coffee means more muffins; This choice says muffins won't change at all.
Key Concepts
Complementary Goods
Demand Dynamics
Cross-Price Elasticity
Topic
Complementary Goods and Demand
Difficulty
easy level question
Cognitive Level
understand
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