Answer to Question #242608 in Microeconomics for shine

Question

Ketchup is a complement (as well as a condiment)

for hot dogs. If the price of hot dogs rises,

what happens to the market for ketchup? For

tomatoes? For tomato juice? For orange juice?

Answer 1

If the price of hot dogs rises, the quantity demanded of Hot dogs falls resulting in a fall in demand for ketchup. Both price and quantity of ketchup Will decrease.

Due to fall in quantity of ketchup, the demand for tomatoes by ketchup producers will also fall, so both the price and quantity of tomatoes will reduce.

When the price of tomatoes falls, producers of tomato juice will have their input at a lowee cost. More tomato juice will be produced and supply for the same will rise at a lower price.

A fall in price of tomato juice will result in consumers substituting orange juice for tomato juice. Thus the quantity demanded of orange juice will decrease. This leads to a fall in price and quantity of orange juice.

Hence, a rise in price of hotdogs finally leads to a decrease in price of orange juice.