Answered: Because bagels and cream cheese are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Because bagels and cream cheese are often eaten
together, they are complements.
a. We observe that both the equilibrium price of
cream cheese and the equilibrium quantity of
bagels have risen. What could be responsible for
this pattern: a fall in the price of flour or a fall
in the price of milk? Illustrate and explain your
answer.
b. Suppose instead that the equilibrium price of
cream cheese has risen but the equilibrium
quantity of bagels has fallen. What could be
responsible for this pattern: a rise in the price of
flour or a rise in the price of milk? Illustrate and
explain your answer.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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