Bag of chips and bottles of salsa are perfect complements for consumer who eats only chips and salsa, but a bottle of salsa costs $1 more than a bag of chips.The income effect of a 50 cent increase in the price of a bag of chips will be fore the consumer to eat fewer chips and less salsa.

Question

Quizplus · Accepted Answer

The income effect of a price increase for a normal good (like chips and salsa) results in the consumer buying less of both products. Therefore, if the price of chips increases, the consumer will likely buy fewer chips and, therefore, less salsa as well.

Bag of Chips and Bottles of Salsa Are Perfect Complements