Answer to Question #261153 in Microeconomics for Nainsi

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

The market for Ketchup will decline since complements. The increase in price for hot dogs will reduce the quantity demanded and thus reducing the market for Ketchup.

The market for tomatoes as well as tomato juice will also be reduced since if the demand for Hot dogs which are consumed together with tomato components reduces and thus its demand goes low as well as the equilibrium price.

When the price of tomatoes falls, producers of tomato juice face lower input prices, so the supply curve for tomato juice shifts out, causing the price of tomato juice to fall and the quantity of tomato juice to rise. The fall in the price of tomato juice causes people to substitute tomato juice for orange juice, so the demand for orange juice declines, causing the price and quantity of orange juice to fall.