Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Demand for coffee will decrease due to the complementarity with muffins.
B
Demand for coffee will increase as consumers seek substitutes.
C
Demand for coffee will remain unchanged regardless of muffin prices.
D
Demand for coffee will decrease because consumers will buy fewer muffins.
Understanding the Answer
Let's break down why this is correct
Answer
When the price of muffins increases, people may buy fewer muffins because they cost more. Muffins and coffee are complementary goods, which means they are often enjoyed together. If fewer muffins are bought, people might also buy less coffee since they usually drink coffee with their muffins. For example, if a customer usually buys a muffin and a coffee for breakfast but now finds the muffin too expensive, they might skip the coffee as well. Therefore, the demand for coffee is likely to decrease when muffin prices rise.
Detailed Explanation
Muffins and coffee are complementary goods. Other options are incorrect because This answer suggests that people will switch to coffee instead; This answer assumes that coffee demand won't change.
Key Concepts
Complementary Goods
Demand
Cross-Price Elasticity
Topic
Complementary Goods and Demand
Difficulty
hard level question
Cognitive Level
understand
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