Video TranscriptSo here we need to analyze the market for peanut butter right. So the first thing we should do is draw the market for peanut butter, great quantity and price downward. Sloping demand curve upward, sloping supply curve, and this is peanut butter right and now we have to think about what's happening to this market. So the first thing that's happening is that price of peanuts go up. Pea nuts are more expensive, so we should think about whether this affects the buyers right: the buyers, the people who whoo purchase they stop at the grocery store or the firms that produce. Obviously this is going to affect the firms, and a commonist would call this. An increasing input cost right, something that goes into peanut. Butter is being affected, supply is more expensive right. People who make penuts butter have higher costs, and that means supply is going to decrease right supply is getting more expensive right. You can think of supply going up. If you prefer for any given quantity, suppliers will need a higher price. So there's my supply shift. We now have a second shock, however, that the price of jolly goes up is also more expansive. As you point out, this is a related good right. It is a related good. I think your understanding here is great. I just think is this a compliment or substitute? That'S the question and i think what the question is getting at is: they are actually treating this like a substitute, not a compliment. Right. Compliments are things that go together and, yes, it seems like peanut butter and jelly go together, but there are also both things. You can put on bread and if you don't have peanut butter, you could consider putting jelly on bread. Instead, they are. Both. You know, spreads and spreads could replace each other to some degree right. So i agree that, if compliment right, if compliment what's happening, is that the price of jelly is going up, which means the quantity of jelly is going down, which means the quantity of peanut butter desired is going down right, because when you, if they're compliments, you want These things to go together and you'd have a demand decrease if it's a substitute, however, because there these are both things that you can spread on bread and if you don't have 1, you could put the other on bread instead right, the price of jelly goes up, Which means the quantity of jelly goes down, which means the quantity of peanut butter goes up right, and so it all comes down to the domain. So obviously supply is going to decrease, which is the same as up to the left. But it's not immediately clear to me whether peanut, butter and jelly are compliments or substitutes all right. They could be things that you both put on bread right. Maybe you have peanut butter toast. Maybe you have jelly toast right. So that's up for debate. If i was just looking at this myself as some 1 who's been a professor of economics for 10 years, i would have totally agreed with you. I would have said that he there were compliments, and my guess is that since their compliments then you're right that the demand curve would go to the the left right decrease. Whenever these things go together, we have less jelly, so we need less peanut butter to go with our jelly, but if they're substitutes, that would be an easy way to get the answer. You'Re looking for right demand would then increase if substitutes, and if the answer is c, that must be what they're thinking of right. They must be thinking that these things are both things you put on bread, so if you don't have 1, you could use the other. That'S that that the logic for y c would be the right answer. Show Sets found in the same folderHomework 110 terms susaann11 Homework 39 terms susaann11 Micro Chapters 8, 9, 10,1178 terms mkillen14 Homework 5/640 terms jordan772 Recommended textbook solutions The Language of Composition: Reading, Writing, Rhetoric2nd EditionLawrence Scanlon, Renee H. Shea, Robin Dissin Aufses 661 solutions
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Technical Writing for Success3rd EditionDarlene Smith-Worthington, Sue Jefferson 468 solutions What happens to peanut butter if price of jelly decreases?If the price of jelly decreases, the demand for peanut butter, a complementary good to jelly, will increase. The increase in the demand for peanut butter will cause the price of peanut butter to rise.
What will happen to the demand for jelly of peanut butter goes on sale?What will happen to the demand or quantity demanded for jelly if the price of peanut butter increases? Answer: The demand curve for jelly will shift to the left (decrease). Since you would buy less peanut butter when its price increases, you will also buy less jelly (since they are complements). 2.
What will happen to the demand curve if the price of peanut butter falls?Changes in the price of related goods and services
Alternatively, if the price of complementary goods increases, the curve will shift inwards. The opposite is true for substitute goods. For example, if the price for peanut butter goes down significantly, the demand for its complementary good – jelly – increases.
When the price of a product goes down what happens?If the price decreases, quantity demanded increases. This is the Law of Demand. On a graph, an inverse relationship is represented by a downward sloping line from left to right.
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What happens to the market for peanut butter after the price of jelly goes down?
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