If an increase in the price of peanut butter causes a decline in the demand for jelly,then _____
A)the goods are substitutes.
B)jelly is an inferior good.
C)the goods are complements.
D)both goods are necessities.
E)peanut butter is an inferior good.

Question

Quizplus · Accepted Answer

When two goods are complements, an increase in the price of one will cause a decrease in the quantity demanded of both goods. In this case, peanut butter and jelly are often consumed together, so an increase in the price of peanut butter would reduce the demand for jelly as well.

If an Increase in the Price of Peanut Butter Causes