Goods A and B are complementary goods. A decrease in price of good A has occurred. In the market for good B, this will lead to
A) an increase in price and a decrease in quantity.
B) an increase in price and an increase in quantity.
C) a decrease in price and a decrease in quantity.
D) a decrease in price and an increase in quantity.

Question

Quizplus · Accepted Answer

Complementary goods are goods that are used together, such as coffee and coffee filters or bread and butter. If the price of good A, which is complementary to good B, decreases, it will increase the demand for good A, thus increasing the demand for good B. As a result, the price of good B will increase and the quantity of good B will increase, leading to an increase in both price and quantity. Therefore, option B is the correct answer.

Goods a and B Are Complementary Goods