Ceteris Paribus, an increase in the price of a complement will cause which of the following...
Ceteris Paribus, an increase in the price of a complement will cause which of the following to occur:
a. our demand curve to shift to the left and a higher equilibrium price
b. our demand curve to shift to the right and a lower equilibrium price
c. our demand curve to shift to the left and a lower equilibrium price
d. our demand curve to shift to the right and a higher equilibrium price
e. our quantity demand at the new equilibrium to increase, but price to remain unchanged
Homework Answers
Ans. c. our demand curve to shift to the left and a lower equilibrium price
Other things constant, an increase in the price of a complement will lead to the fall in the demand of the good and demand curve shift leftward, a lower equilibrium price. A decrease in the price of a complement will lead to the rise in the demand for the good and demand curve shifts rightward, a higher equilibrium price as both goods consume together.
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