Hot dogs and hot dog buns are complements.An increase in the price of flour used to make hot dogs buns will
A)increase consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.
B)increase consumer surplus in the market for hot dogs and increase producer surplus in the market for hot dog buns.
C)decrease consumer surplus in the market for hot dog buns and increase producer surplus in the market for hot dogs.
D)decrease consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs.

Question

Quizplus · Accepted Answer

An increase in the price of flour used to make hot dog buns will increase the cost of production for hot dog buns. As a result, the supply curve of hot dog buns will shift upwards leading to an increase in the price of hot dog buns. This will decrease the quantity of hot dogs demanded, leading to a decrease in the price of hot dogs. This will decrease consumer surplus in the market for hot dog buns and decrease producer surplus in the market for hot dogs. Therefore, the correct answer is D.

Hot Dogs and Hot Dog Buns Are Complements