Question

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)?
A. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.
B. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.
C. The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players.
D. The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

Answer 1

Answer:

A. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. 

Explanation:

Complement goods are goods that are demanded together. An increase in demand for one good would lead to an increase in demand for the other good.

If the price of LCDs falls, the quantity demanded would increase. This would lead to an increase in demand for the players too. The increase in demand for the players leads to a rise in price of the players.

I hope my answer helps you.