#50 If we assume that products Z and Y are complements and the price of Y decreases:Multiple Choicethe demand curves for both Z and Y will shift to the left.the demand for Z will increase and the quantity demanded of Y will increase.the amount of Y purchased will increase, but the demand curve for Z will not shift.the demand for Z will decline and the demand for Y will increase.nothing will change

Answered: If we assume that products Z and Y 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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#50

If we assume that products Z and Y are complements and the price of Y decreases:
Multiple Choice
the demand curves for both Z and Y will shift to the left.
the demand for Z will increase and the quantity demanded of Y will increase.
the amount of Y purchased will increase, but the demand curve for Z will not shift.
the demand for Z will decline and the demand for Y will increase.
nothing will change

Expert Solution

Step 1: Introduce the concept of complementary goods:

Complementary goods are goods that are consumed together. If good Y and good Z are complementary goods then the demand for good Z is affected by a change in the price of good Y. There will be a negative relationship between the price of good Y and the demand for good z.

For example, bread and butter are complementary goods. If the price of butter falls, the demand for bread will increase.

"The law of demand states that as the price of a good decrease, the quantity demanded will increase".

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