Assume that soft drinks and fried chicken are complementary goods for consumers. The effect of an increase in the price of soft drinks on the market for fried chicken would be to:

Question

BlackTom AI · Accepted Answer

Complementary goods are consumed together, so when the price of one complementary good rises, the quantity demanded of that good falls and consumers also buy less of the complementary good. This is formalized by a negative cross-price elasticity of demand for complements.

Step-by-step reasoning:
1. Increase in the price of soft drinks → fewer soft drinks purchased (movement along the soft-drink demand curve).
2. Because soft drinks and fried chicken are complements, the reduced consumption of soft drinks lowers the desire to buy fried chicken at every given price.
3. A fall in consumers’ willingness to buy fried chicken at each price is a decrease in demand, which is represented as a leftward shift of the fried-chicken demand curve (from D1 to D2).
4. Graphically, at the same fried-chicken price, the equilibrium quantity falls; alternatively, for any targeted quantity sellers would have to lower price to induce purchase.

Why option (a) is correct:
- It describes exactly this leftward shift in the demand curve for fried chicken due to the higher price of its complement (soft drinks).

Why the other options are incorrect:
- (b) shift the supply curve to the right: supply is driven by production costs, technology, input prices, etc. A change in the price of a complementary good affects demand, not suppliers’ ability or willingness to produce fried chicken, so supply shouldn’t shift right.
- (c) shift the demand curve to the right: a higher price of a complement reduces, not increases, demand for the paired good, so the demand curve shifts left, not right.
- (d) shift the supply curve to the left: same logic as (b); there’s no reason for fried-chicken supply to decrease because soft-drink prices rose.

Conclusion: The correct effect is a leftward shift of the demand curve for fried chicken, matching answer (a).

Assume that soft drinks and fried chicken are complementary goods for consumers. The effect of an increase in the price of soft drinks on the market for fried chicken would be to:Single choice

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