Answered: When goods are complements, there is a…

When goods are complements, there is a direct relationship between the price of one and the demand for the other. 1) True 2) False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: $4 Price of pizza 0 с D₁ D₂ Number of pizzas per month on demand curve D2 would be caused by a(n) D3…

A: Movement along the same demand curve occurs when the demand of a good or service changes due to…

Q: What is the difference between good x as a function of price and income and good x as a function of…

A: Factors affecting demand are demand determinants. Price (P) , income(Y) , utility (U), taste and…

Q: Given the demand function of a certain good to be: Qp = 46+3Y - 4P %3D where Op, P, Y denote…

A: Normal good :- If demand and income has positive relationships . More demand of goods caused by high…

Q: Wayne likes to buy cheese and wine. When Wayne's income increases by 10% his demand for wine…

A: Here we calculate the elasticity of demand and conclude the nature of the goods , so the calculation…

Q: Suppose people buy more of good A when the price of good B rises. These goods are: substitutes…

A: Demand refers to the desire backed by the ability and willingness to pay of the commodity at the…

Q: why is the answer A and not B?

A: Answer is A,because in inelastic demand,quantity demanded change decreases by less than price…

Q: The demand of normal good rises when the income of consumer is rising True/False

A: In a market, goods are classified as normal good, inferior good, Giffen good, and so on.

Q: Using the following concepts, explain why price and quantity demanded have an inverse relationship.…

A: We have inverse relationship between price and quantity demanded.

Q: State true or false Normal goods have positive relationships between income and demand

A: Depending upon how the consumer reacts to the demand of a particular good or service whenever there…

Q: Can a good be both a complement and a substitute at the same time? If so, provide an example. If…

A: Complementary goods are those which create demand for each other and are of no use alone so that…

Q: Two goods are complements if a decrease in the price of one good A) decreases the quantity…

A: Complementary goods are specific types of goods that are used together or enhance each other’s value…

Q: Suppose we have a market with 200 individuals with preferences over two goods, x and y. 1. Consider…

A: Since you have posted multiple subparts, as per Bartleby guidelines, we can solve only the first 3…

Q: Food and clothing are necessary goods. Hence, demand for these goods will show a greater degree of…

A: Income elasticity represents the responsiveness of demand because of changes in income.

Q: The increase in the price of meat reduces the amount of demand for meat. Ceteris Paribus. The…

A: Ceterus paribus is an assumption which states that all other factors would remain constant and only…

Q: The substitution effect implies that as the price of a substitute good, the demand for the original…

A: Substitute goods are those goods that are consumed in place of each other. For example, Pepsi and…

Q: The price of crayons has decreased and Shelly decides to buy fewer colored pencils. Shelly's…

A: Two goods are considered substitutes in economics if they can both satisfy the same need. In the…

Q: ements. utes. substitutes

A: In economic aspects, products are things that add some sort good for the existences of individuals…

Q: If the demand curve for product A moves to the right, and the price of product B increases, it can…

A: The law of demand asserts an inverse relationship between the price of a good or service and its…

Q: Consider two goods, X and Y. If the price of Y increases and, as a consequence, the demand curve for…

A: Substitute goods: If two goods are used for the same purpose by the consumers. Complementary goods:…

Q: Suppose the price of good Y is $18. Use the information given in the figure below to answer this…

A: The price effect is known as the effect on the quantity demanded due to the change in price. The…

Q: Income: $100 Price of good 2: $5 A) XA = m/PA + p2 B) XB = 100 + 10pB - m C) XC = -pc * p2 + 5m…

A: Demand function refers to the function that shows the relationship between the quantity of a certain…

Q: Suppose consumers A and B have the following demand functions for x: For each consumer, is x is…

A: The nature of goods as normal and inferior goods can only be recognised in the presence of income…

Q: sider two goods that are perfect substitutes such that four (4) units of good X always provide the…

A: Substitute goods refer to the goods which are used for each other. Both are competitors , when price…

Q: When the price of a good increased by 2%, the quantity demanded of it decrease 10% does this have…

A: A substitute good in economics is a thing or service that can be used in lieu of another good or…

Q: In case of complementary goods, a rise in price of Good X causes a rise in demand for Good Y. A True…

A: Ans in step 2

Q: ) If the price of good X increases from RM3 to RM5, the quantity demanded drops from 10 to 12. Find…

A: Slope of the demand curve can be calculated by using the following formula.

Q: Suppose that a decrease in the price of X results in less of good Y sold. This would mean that X and…

A: Substitute goods are those goods that are used for the same purpose. For example, Tea and coffee are…

Q: a. Indicate whether goods Y and Z are substitutes or complements for good X. Good Y is: (Click to…

A: Note: Since you have posted a question with multiple sub parts, we will provide the solution only to…

Q: Consider a market with two goods, x and z. The consumer’s utility function is U = x^0.2z^0.8 A.…

A: Utility denotes the want satisfying power of a commodity. A consumer maximizes his/her utility when…

Q: m x1 = 10 + 10р1 If income is 200 and product is sold for price of 10, subsitition and income effect…

A: The income effect is the change of consumption of a good due to a change in income. The substitution…

Q: What are the examples of complement and substitute goods, where a change in price of one good would…

A: The market demand for a commodity shifts as a result of a change in consumer income, their tasted,…

Q: Arya only consumes two goods: X and Y. When the price of X changes, the income effect and the…

A: For normal goods : Income effect says that decrease in price of one good increases quantity demanded…

Q: percent decrease in the price of avocados leads to a 20 percent increase in the quantity of salsa…

A: Complementary goods are those goods where change in price of one good leads to change in the demand…

Q: Suppose that the demand function is y=-3x + 54. A. What is the highest price a consumer would pay…

A: A demand function shows the relationship between the price and quantity demanded. The law of demand…

Q: The price of meatballs increases, and as a result, the demand curve for salad shifts to the right.…

A: Substitute goods: Those goods are said to be substitute goods when they are used for the same…

Q: The substitution effect of a price change: will always offset the income effect. will always…

A: The substitution effect occurs when a price increase causes the demand and ensuing sales numbers for…

Question

When goods are complements, there is a direct relationship between the price of
one and the demand for the other.
O 1) True
O 2) False

Expert Solution

Step 1

Complementary goods are those goods that are demanded jointly to fulfil single wants. This means when two goods are demanded together to fulfil single wants then those goods are considered as compliment goods.

Example:

car and petrol
cereal and milk
pen and ink

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Discuss four (4) factors that affect an individual demand curve.
Suppose that after your income increases, you consume less fast food. This means: Fast food is considered an inferior good. Coke and Pepsi are substitutes. Coke and fried chicken are complements. None of the above.
In the given demand function below, if ay is negative, then * Q- 10 + a,R+ ay Byt ay H goods X and Y are complement. goods X and Y are inferior goods. goods X and Y are normal goods. O goods X and Y are substitutes.
1) The demand equation for a good is given as Q = 200 - 4P + 6M + 2P. P: The price of the good M: The income of the consumer P,: the price of the substitute good, where the values P = 80, M = 60 and P = 100 are provided, a) what is the price elasticity of demand? Provide information about the nature of the goods. b) What is the income elasticity of demand? Provide information about the nature of the goods. c) What is the cross-price elasticity of demand? What can be said about Maliar?
Which of the following statements is true for a Giffen good? (a) Following a fall in the price of the good, there will be a decrease in the quantity demanded due to the substitution effect; an increase in the quantity demanded due to the income effect; the substitution effect will outweigh the income effect. (b) Following a fall in the price of the good, there will be an increase in the quantity demanded due to both the substitution and income effect and the two effects will therefore reinforce each other. (c) Following a fall in the price of the good, there will be an increase in the quantity demanded due to the substitution effect; a decrease in the quantity demanded due to the income effect; the substitution effect will outweigh the income effect. (d) Following a fall in the price of the good, there will be an increase in the quantity demanded due to the substitution effect; a decrease in the quantity demanded due to the income effect; the income effect will outweigh the…
To help with his busy schedule, Joe drinks a lot of cappuccinos. In particular, his weekly demand for cappuccinos is: cap = 0.1 M-8 Pcap Where Xcap is the number of cappuccinos drunk per week, Mis Joe's weekly income and Pcap is the price of a cappuccino. (Note that Xcop is an average demand and need not be a whole number). (a) Suppose that income M = 240 euro, and the price is Pcap = 1.5 euro. How many Cappuccino, on average, will Joe drink per week? Suppose that the price increases to Pcap = 1.6 euro. (b) What is Joe's new demand for cappuccinos? What is his total change in demand due to the price change? (c) Given the new price (Pcap = 1.6), how much extra income would Joe need to allow him to continue buying the number of Cappuccinos calculated in part (a), without needing to reduce his demand other goods? (In other words, how much would Joe's expenditure on cappuccinos have gone up if he had continued to buy the number of cappuccinos calculated in part (a)?) (d) Compute the change…
If the utility function for a consumer is defined by U=6X^0.6Y^0.7 . Given that the consumer's income is 300 currency units and unit price of goods X and Y are 12 and 15 currency units respectively, calculate the equilibrium quantity of both goods. Compute the price elasticity of demand for both goods and interpret your results. If income and prices of the two goods increase by 50%, calculate the equilibrium quantities of both goods
QUESTION 5 Refer to Figure 1 below: Price (dollar) Z W •D₂ Quumtity . A movement from point Z to point V could have been the result of a price increase. an increase in buyers' income (assuming that this is a normal good). an increase in the price of a complement to this good. a decrease in the number of buyers.
Show solutions step by step.
Use the figure below to answer the following question. Price Multiple Choice Quantity point 1 to point 4. D3 Refer to the three demand curves. A "decrease in demand" would be illustrated as a change from point 6 to point 3. line D3 to D2. line D₁ to D3 6 D₁ D₂
If the income elasticity of potatoes is -0.7, then the income effect caused by a price decrease of potatoes A) tends to increase the consumption of potatoes. B) tends to decrease the consumption of potatoes. C) is less than the substitution effect. D) None of the above.
Explain the Price Effect Curve below in the case when the price of good 1 upon x-axis rises whereas the price of good 2 on y-axis remains unchanged? If we connect the points, we have the price consumption curve. It shows the utility-maximizing points when the price of a good changes. X3 X2 X,