Question

Assume Peanut Butter and Jelly are two complement products. For both markets explain what happens for an increase in the Supply of Jelly to both the Peanut butter and Jelly markets.

Answer 1

Answer:

Complementary goods are goods that are consumed together

If the supply of Jelly increases, the supply curve for jelly shifts rightward. As a result of the rightward shift, price decreases and quantity increases.

Because jelly and peanut butter are complements, an increase in the supply leads to an increase in the supply of peanut butter.

the supply curve of peanut butter shifts outward also. As a result of the rightward shift, price decreases and quantity increases.

Explanation: