📚 Learning Guide
Complementary Goods and Demand
medium

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

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

increase

B

decrease

C

remain unchanged

D

become elastic

Understanding the Answer

Let's break down why this is correct

Answer

When the price of muffins goes up, people may buy fewer muffins. Since muffins and coffee are complementary goods, meaning they are often enjoyed together, this can lead to a decrease in the demand for coffee as well. For example, if someone usually buys a muffin and a coffee for breakfast, a higher price for muffins might make them decide to skip the muffin and not buy the coffee either. This shows that when the price of one good increases, it can affect the demand for another good that is usually purchased alongside it. Therefore, as the demand for muffins decreases, the demand for coffee is likely to decrease too.

Detailed Explanation

When muffins cost more, people buy fewer muffins. Other options are incorrect because Some might think that if muffins are more expensive, people will buy more coffee to enjoy with them; It's a common mistake to think that demand stays the same regardless of price changes.

Key Concepts

Complementary Goods
Demand
Cross-Price Elasticity
Topic

Complementary Goods and Demand

Difficulty

medium level question

Cognitive Level

understand

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