Question

Bob views Tea and Scones as compliments. If the price of Scones increases:

1. Bob's Quantity demanded of Scones will decrease and his demand for tea will increase

2. Bob's Quantity demanded of Scones will decrease and his demand for tea will decrease

3. Bob's demand for Scones will decrease and his demand for tea will increase

4. Bob's demand for Scones will decrease and his demand for tea will decrease

Answer 1

2. Bob's Quantity demanded of Scones will decrease and his demand for tea will decrease

Explanation :

When two goods are complements. They used together. So when price of one good increases, demand for another good decreases.

Law of demand states that other things remains constant, increase in the price of good, decreases the quantity demanded and decrease in the price of good increases the quantity demanded.

Here scones and tea are complement goods so, when price of scone increases, demand for tea will decrease. Also quantity demanded for scones decrease.