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Posted about 1 month ago

Shampoo and conditioner are complementary goods.
What happens to the price and quantity of conditioner if the price of shampoo decreases?

Choose 1 answer:
(A) Price increases; quantity increases.
(B) Price decreases; quantity decreases.
(c) Price decreases; quantity increases.
(D) Price increases; quantity decreases.
(E) Price decreases; quantity demanded does not change.
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Answer from Sia
Posted about 1 month ago
Complementary Goods: Shampoo and conditioner are complementary goods, meaning they are often used together
Price Decrease in Shampoo: When the price of shampoo decreases, consumers are likely to buy more shampoo
Increase in Demand for Conditioner: As more shampoo is purchased, the demand for its complement, conditioner, also increases
Shift in Demand Curve: The increase in demand for conditioner shifts the demand curve for conditioner to the right
New Equilibrium: The new equilibrium will have a higher quantity and a higher price for conditioner
(A) Price increases; quantity increases.
Key Concept
Complementary Goods
When the price of a complementary good (shampoo) decreases, the demand for the related good (conditioner) increases, leading to a higher equilibrium price and quantity for the conditioner.

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