As the price of milk increases,what happens at the original equilibrium in the market for cereal that signals market participants that the original equilibrium must change? (Milk and cereal are complements.)

Question

Quizplus · Accepted Answer

When the price of milk increases, demand for its complement, cereal, decreases because consumers are less likely to buy milk, thereby reducing their consumption of cereal as well. This decrease in demand for cereal, at the original equilibrium price, creates a surplus as the quantity supplied exceeds the quantity demanded.

As the Price of Milk Increases,what Happens at the Original