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 Transcribed Image Text:Knowing that peanut butter and jelly are complementary goods, what can be expected if the price of peanut butter goes up (other things being equal)? Buyers of peanut butter and jelly will move downward and to the right along the the market demand curve for peanut butter. Buyers of peanut butter and jelly will shift their demand for jelly to the left. Market price of jelly will fall. All of the above are expected to occur. Expert Solution Students who’ve seen this question also like: Related Economics Q&AFind answers to questions asked by students like you. Q: Consider the market for pizza in Starkville. Which of the following will shift the demand curve for… A: Demand for a good represents the quantity of the good that the consumers are willing to buy at a… Q: Agree or disagree, if both coffe and tea are normal goods and the price of coffe increase, it will… A: Normal goods are those goods which have positive relationship with the income of consumers. 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ISBN:9781259290619 Author:Michael Baye, Jeff Prince Publisher:McGraw-Hill Education What happens in the market for peanut butter when the price of jelly increases?When the price of jelly increases, the quantity demanded of jelly decreases. Because peanut butter and jelly are complementary goods, you will also want less peanut butter. Thus, the demand for peanut butter decreases.
What happens to the market for peanut butter after the price of jelly goes down?If the price of jelly decreases, the demand for peanut butter, a complementary good to jelly, will increase. The increase in the demand for peanut butter will cause the price of peanut butter to rise.
What would happen to supply of peanut butter if the price of peanuts goes up?What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you? Price will rise and the effect on quantity is ambiguous.
What will happen to the demand curve if the price of peanut butter falls?Changes in the price of related goods and services
Alternatively, if the price of complementary goods increases, the curve will shift inwards. The opposite is true for substitute goods. For example, if the price for peanut butter goes down significantly, the demand for its complementary good – jelly – increases.
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Why would the demand for jelly decrease when the price of peanut butter goes up?
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