Barbecue sauce and chicken thighs are complement goods. Suppose that the government places a tax on chicken thighs to discourage the consumption of fatty meat. General equilibrium analysis predicts a ____ effect on the equilibrium price and a ____ effect on the quantity of barbecue sauce than partial equilibrium analysis.

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In general equilibrium analysis, the interdependence between markets is considered. A tax on chicken thighs will increase their price, reducing their demand. As chicken thighs and barbecue sauce are complements, the demand for barbecue sauce will also decrease, leading to a larger effect on both the equilibrium price and quantity of barbecue sauce compared to partial equilibrium analysis, which only considers the market in isolation.

Barbecue Sauce and Chicken Thighs Are Complement Goods