17. Suppose that low-fat milk and cream are complements in production, while low

Q: 17. Suppose that low-fat milk and cream are complements in production, while low

The answer is: b. The equilibrium price of low-fat milk will fall, and the equilibrium quantity will be indeterminate. Explantion: We now that it's price will fall because the complement in supply falls. The demand will be indeterminate.

ID: 1096513 • Letter: 1

Question

17. Suppose that low-fat milk and cream are complements in production, while low-fat milk and chocolate syrup are complements in consumption. If the price of cream falls at the same time that the price of chocolate syrup rises, how will equilibrium in the market for low-fat milk be affected?

a. The equilibrium price of low-fat milk will rise, and the equilibrium quantity will fall.

b. The equilibrium price of low-fat milk will fall, and the equilibrium quantity will be indeterminate.

c. The equilibrium price of low-fat milk will fall, and the equilibrium quantity will rise.

d. The equilibrium price of low-fat milk will be indeterminate, and the equilibrium quantity will fall.

Explanation / Answer

The answer is:

b. The equilibrium price of low-fat milk will fall, and the equilibrium quantity will be indeterminate.

Explantion: We now that it's price will fall because the complement in supply falls. The demand will be indeterminate.

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17. Suppose that low-fat milk and cream are complements in production, while low

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