Question

Suppose there is an improvement in technology in this market and the price of lamps, a complementary good, increases. What changes do you predict in the equilibrium price and quantity

Answer 1

Answer:

Complementary goods are those goods that, as the word implies, are often used together. For example: milk and cereals, or gasoline and cars.

If the price of a complementary good increases, then, the price of the other complementary good will likely increase as well. The quantity demanded for both will fall, will the supply will increase.

This is exactly what would happen in the case, the price of the good that is complementary to lamps will increase, and its quantity demanded will fall.