Raisin bran and milk are complementary goods. A decrease in the price of raisins

ID: 1169123 • Letter: R

Question

Raisin bran and milk are complementary goods. A decrease in the price of raisins will:

a. decrease producer surplus in the market for milk.

b. increase producer surplus in the market for milk.

c. decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.

d. decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.

a. decrease producer surplus in the market for milk.

b. increase producer surplus in the market for milk.

c. decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.

d. decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.

A decrease in price of raisin will decrease the demand for milk, since they are complements.

Demand curve of milk will shift toward left.

This will decrease producer surplus in milk market.

Correct option (a)

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.