Wine and cheese are complement goods because they are consumed together.What would we expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant?
A) It would increase because of a supply shift.
B) It would increase because of a demand shift.
C) It would stay the same because of both a demand and a supply shift.
D) It would decrease because of a supply shift.
E) It would decrease because of a demand shift.

Question

Quizplus · Accepted Answer

Since wine and cheese are complementary goods, an increase in the price of wine would lead to a decrease in demand for wine. As a result, the demand for cheese would decrease as well, causing a decrease in the equilibrium quantity of cheese. Therefore, the best answer is E.

Wine and Cheese Are Complement Goods Because They Are Consumed