Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
An increase in the price of muffins will typically decrease the demand for coffee.
B
Complementary goods always have a positive cross-price elasticity.
C
If the price of one complementary good decreases, the demand for its pair usually increases.
D
The demand for coffee will not be affected by changes in the price of muffins.
E
Complementary goods are unrelated and do not influence each other.
Understanding the Answer
Let's break down why this is correct
Answer
Complementary goods are products that are often used together, meaning that when the demand for one increases, the demand for the other also tends to increase. For example, if more people start buying coffee, the demand for sugar may also rise because many people like to add sugar to their coffee. This relationship occurs because these goods complement each other in use. When the price of one complementary good decreases, it can lead to an increase in demand for the other good as well. Understanding this relationship helps businesses and consumers make better decisions about purchasing and pricing.
Detailed Explanation
Complementary goods are items that are used together. Other options are incorrect because This suggests that if muffins cost more, people will buy less coffee; This says that complementary goods always increase in demand together.
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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