Answer to Question #149784 in Microeconomics for Amna

Question

Burgers and coke are complements because they are often enjoyed together. When the price of coke rises, what happens to the supply, demand, quantity supplied, quantity demanded, and the price in the market for burgers? Explain numerically and graphically.

Answer 1

Burgers and coke are complementary goods.

Complementary goods are goods, such that the rise of price in one will lead to a decrease in quantity demanded another.

When the price of coke rises, the quantity demand for burgers falls. This can be seen where the demand curve (D1) shifts left to the demand curve (D2).

Due to the shift in the demand curve, the price decreases from P1 to P2, and the quantity demanded decreases from Q2 to Q1.

At quantity Q2, suppliers would want to sell at a higher price. However, it leads to excess supply and they are forced to sell at the equilibrium price of P2.