Question

Bagels and cream cheese are complementary goods. The price of flour, used to make bagels, has fallen. As a result, the equilibrium price of cream cheese ______ and the equilibrium quantity of cream cheese ______.
(A) Rises; rises
(B) Rises; falls
(C) Falls; falls
(D) Falls; rises

Answer 1

Answer: When the price of the flour falls, the equilibrium price of the cream rises and the equilibrium quantity of the cream cheese also rises

Answer A is correct

Explanation:

if flour is cheaper, bagels are chepear so demand increases and both equilbrium price and equilibrium quantity rises