Question

Evaluate the following statement “If two items are complements in production, an increase in the price of production complement will increase the supply of the item in question.”

Answer 1

Correct, “If two items are complements in production, an increase in the price of production complement will increase the supply of the item in question”.

Explanation

When two goods are complements, an increase in the price of a good, not only affect the supply of good who's price is decreased but also affect good which consume together. Suppose, printer and ink refill are complements in production. so, if price of printer increase, it not only increase the supply of printer but also increase the supply of   ink refill. Therefore, we can say that,  “If two items are complements in production, an increase in the price of production complement will increase the supply of the item in question”.