Given that shoes and shoe polish are complementary goods, an increase in the price of shoes will cause the equilibrium price and quantity of shoe polish to fall.

Question

Quizplus · Accepted Answer

Complementary goods have a negative cross-price elasticity, meaning that an increase in the price of one good will cause a decrease in the demand for the complementary good. In this case, an increase in the price of shoes will cause a decrease in the demand for shoe polish, leading to a decrease in both the equilibrium price and quantity of shoe polish.

Given That Shoes and Shoe Polish Are Complementary Goods, an Increase