If two inputs are complementary and employed in fixed proportions, an increase in the price of one input will
A)decrease the demand for the other input.
B)increase the demand for the other input.
C)increase the quantity demanded for the other input.
D)have no effect on the demand for the other input.

Question

Quizplus · Accepted Answer

When two inputs are complementary and used in fixed proportions, an increase in the price of one input makes it more costly to produce the good, reducing the production quantity. This, in turn, decreases the demand for the complementary input since both are used together in fixed proportions.

If Two Inputs Are Complementary and Employed in Fixed Proportions