What will happen to the demand for breakfast cereal as a result of: a) an increa
ID: 1220330 • Letter: W
Question
What will happen to the demand for breakfast cereal as a result of: a) an increase in the price of milk; b) an increase in the price of bagels.
a) increase; b) increase
a) increase; b) decrease
a) decrease; b) increase
a) decrease; b) decrease
Nothing; the demand curve will not be affected because these are separate products
a) increase; b) increase
a) increase; b) decrease
a) decrease; b) increase
a) decrease; b) decrease
Nothing; the demand curve will not be affected because these are separate products
Explanation / Answer
Option (3): (a) decrease, (b): increase
Milk is a complement to breakfast cereal, so higher price of milk will reduce the demand for cereal. but bagel is a substitute of cereal, so higher price of bagels will increase the demand for breakfast cereal.
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