If the price of peanut butter decreases substantially (ceteris paribus), the equilibrium quantity of jelly, a complement, is likely to:
A)increase, and the equilibrium price of jelly is likely to decrease.
B)increase, and the equilibrium price of jelly is likely to increase.
C)decrease, and the equilibrium price of jelly is likely to decrease.
D)decrease, and the equilibrium price is of jelly likely to increase.

Question

If the price of peanut butter decreases substantially (ceteris paribus), the equilibrium quantity of jelly, a complement, is likely to:
A)​increase, and the equilibrium price of jelly is likely to decrease.
B)​increase, and the equilibrium price of jelly is likely to increase.
C)​decrease, and the equilibrium price of jelly is likely to decrease.
D)​decrease, and the equilibrium price is of jelly likely to increase.

Quizplus · Accepted Answer

When the price of peanut butter decreases, people buy more peanut butter. Since peanut butter and jelly are complements, the demand for jelly increases, leading to a higher equilibrium quantity and price of jelly.

If the Price of Peanut Butter Decreases Substantially (Ceteris Paribus)