Question

Cheese is a complement for hamburgers. If the price of hamburgers rises, the quantity of hamburgers demanded , which the demand for cheese. Because of the change in the equilibrium quantity of cheese, the demand for milk by cheese producers , causing the equilibrium price of milk to . This means producers of butter face input prices, and the supply of butter . The resulting in the price of butter causes people to substitute , so the demand for jam .

Answer 1

Answer:

Cheese is a complement for hamburgers. If the price of hamburgers rises, the quantity of hamburgers demanded will fall, which will lead to a fall in the demand for cheese, as cheese and hamburgers are complements to each other. A rise in price of a complementary good will lead to a fall in demand for the complementary good as well. Because of the change in demand for cheese the equilibrium quantity of cheese will fall and the equilibrium price for cheese will also fall, the demand for milk by cheese producers will decline, causing the equilibrium price of milk to fall. This means producers of butter face lower input prices and the supply of butter will rise. The resulting decline in the price of butter causes people to substitute jam for butter, so the demand for jam will decline.