Suppose that bicycles and bicycle helmets are complementary goods. All else equal, if the price of bicycles increases, there will be:
A) a downward movement along the bicycle demand curve.
B) a decrease in the demand curve for helmets.
C) a decrease in the demand curve for bicycles.
D) an upward movement along the helmet demand curve.

Question

Quizplus · Accepted Answer

Since bicycles and helmets are complementary goods, an increase in the price of bicycles leads to a decrease in the demand for bicycles, which in turn decreases the demand for helmets. This is because fewer people buying bicycles means fewer people needing helmets.

Suppose That Bicycles and Bicycle Helmets Are Complementary Goods