Raisin bran and milk are complements.An increase in the price of raisins will
A) increase consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.
B) increase consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
C) decrease consumer surplus in the market for raisin bran and increase producer surplus in the market for milk.
D) decrease consumer surplus in the market for raisin bran and decrease producer surplus in the market for milk.

Question

Quizplus · Accepted Answer

An increase in the price of raisins will raise the cost of producing raisin bran, leading to higher prices for raisin bran. This will decrease consumer surplus in the raisin bran market. Since raisin bran and milk are complements, a decrease in raisin bran consumption will also decrease milk consumption, reducing producer surplus in the milk market.

Raisin Bran and Milk Are Complements