'Because corn chips and salsa are complements, an increase in the price of corn chips will cause the demand for salsa to decrease. This initial shift in demand for corn chips results in a higher price for corn chips; this higher price will cause the demand curve for corn chips to shift to the right.' Which of the following correctly comments on this statement?
A)The statement will be true if consumer tastes for corn chips and salsa do not change.
B)The statement is false because a change in the price of corn chips would not change the demand for corn chips.
C)The statement is false because salsa is an inferior good; corn chips are normal goods.
D)The statement is false because one cannot assume that corn chips and salsa are complements for all consumers.

Question

Quizplus · Accepted Answer

The statement is incorrect because a change in the price of a good affects the quantity demanded, not the demand itself. The demand curve represents the relationship between price and quantity demanded at various prices, assuming other factors remain constant. A movement along the demand curve due to a price change is not the same as a shift in the demand curve, which would be caused by factors other than the price of the good itself, such as changes in consumer income, preferences, or prices of related goods.

'Because Corn Chips and Salsa Are Complements, an Increase in the Price