Bagels and cream cheese are complementary goods. Suppose thatthe price for flour
ID: 1233340 • Letter: B
Question
Bagels and cream cheese are complementary goods. Suppose thatthe price for flour, which is used to produce bagels, increases.The equilibrium price of cream cheese ____ and theequilibrium quantity of cream cheese ____.
rises; decreases
falls; decreases
rises; increases
falls; increases
does not change; does not change
Bagels and cream cheese are complementary goods. Suppose thatthe price for flour, which is used to produce bagels, increases.The equilibrium price of cream cheese ____ and theequilibrium quantity of cream cheese ____.
rises; decreases
falls; decreases
rises; increases
falls; increases
does not change; does not change
Explanation / Answer
Since they are complementary goods, their prices affect each otherpositively. Since the cost of production (flour) increases, supplydecreases. Thus, the equilibrium price of cream cheese risesand the equilibrium quantity of cream cheesedecreases. Hope this helps!
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