Because bagels and cream cheese are often eaten together, they
are complements.
(a) We observe that both the equilibrium price of cream cheese and
the equilibrium
quantity of bagels have risen. What could be responsible for this
pattern—a fall in the
price of flour or a fall in the price of milk? Illustrate and
explain your answer.
(b) Suppose instead that the equilibrium price of cream cheese has
risen but the
equilibrium quantity of bagels has fallen. What could be
responsible for this
pattern—a rise in the price of flour or a rise in the price of
milk? Illustrate and explain
your answer.
Get Answers For Free
Most questions answered within 1 hours.