1. Suppose coffee and cream are complements. How would an increase in the price of cream...

Question

Question

1. Suppose coffee and cream are complements. How would an increase in the price of cream affect the demand for coffee?

2. Suppose Monster and Red Bull energy drinks are substitutes. How would an increase in the price of Red Bull affect the demand for Monster?

business economics

Answer 1

Answer #1

1-complementary goods are those goods in which two goods are interrelated to each other.

So if the price of cream increases demand of coffee decreases.

If the price of a complementary goods increases the demand of the other goods decreases.

2-two goods are the substitute goods if we can use one good instead of the other good.

If the price of substitute goods increases the demand for the other goods increases.

So if the price of Red Bull increases then the demand of monster increases.

Answer 2

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