Sia
Question
Microeconomics
Posted 9 months ago
Pam considers t-shirts and gym classes to be complementary goods.
How will Pam react if the price of gym classes increases?
Choose 1 answer:
A) Her quantity demanded of gym classes will increase, and her demand for t-shirts will increase.
(B) Her quantity demanded of gym classes will decrease, and her demand for t-shirts will decrease.
(c) Her quantity demanded of gym classes won't change, and her demand for t-shirts will increase.
D Her quantity demanded of gym classes will decrease, and her demand for -shirts will be unaffected.
(E) Her quantity demanded of gym classes will increase, and her demand for t-shirts will decrease.
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Answer from Sia
Posted 9 months ago
Solution
a
Complementary Goods: Complementary goods are products that are typically consumed together. When the price of one good increases, the demand for its complement usually decreases
b
Price Increase Effect: If the price of gym classes increases, Pam's quantity demanded for gym classes will decrease because they are now more expensive
c
Demand for T-Shirts: Since t-shirts are complementary to gym classes, Pam's demand for t-shirts will also decrease as she is less likely to attend gym classes
Answer
(B) Her quantity demanded of gym classes will decrease, and her demand for t-shirts will decrease.
Key Concept
Complementary Goods
Explanation
When the price of one complementary good increases, the demand for both goods typically decreases. In this case, an increase in the price of gym classes leads to a decrease in the demand for both gym classes and t-shirts.
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