Bagels and cream cheese_{--------------------} are complementary goods. Suppose that the price for flour, which is used to produce bagels, increases. The equilibrium price of cream cheese and the equilibrium quantity of cream cheese_{--------------------} .

Question

Quizplus · Accepted Answer

When the price of flour increases, the cost of producing bagels rises, leading to a decrease in the supply of bagels. As bagels and cream cheese are complementary goods, a decrease in the quantity of bagels will lead to a decrease in the demand for cream cheese, causing both the equilibrium price and quantity of cream cheese to fall.

Bagels and Cream Cheese-------------------- Are Complementary Goods

Bagels and Cream Cheese_{--------------------} Are Complementary Goods