📚 Learning Guide
Understanding Demand and Supply
medium

If the price of a complementary good decreases, what is the likely effect on the demand for the original good?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

The demand for the original good will increase

B

The demand for the original good will decrease

C

The demand for the original good will remain unchanged

D

The demand for the original good will fluctuate unpredictably

Understanding the Answer

Let's break down why this is correct

Answer

When the price of a complementary good decreases, it usually leads to an increase in the demand for the original good. Complementary goods are products that are often used together, like printers and ink cartridges. If the price of ink cartridges goes down, more people might buy printers because they know it will be cheaper to buy ink. As a result, the demand for printers increases because consumers expect to save money on the complementary product. This relationship shows how changes in one market can affect another, highlighting the interconnectedness of supply and demand.

Detailed Explanation

When the price of a complementary good goes down, people buy more of it. Other options are incorrect because Some might think that a lower price of a complementary good makes the original good less popular; It might seem like the demand would stay the same, but that ignores how prices affect choices.

Key Concepts

Demand
Complementary Goods
Elasticity of Demand
Topic

Understanding Demand and Supply

Difficulty

medium level question

Cognitive Level

understand

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