This graphing calculator illustrates the demand for spaghetti dinners served in

Question

This graphing calculator illustrates the demand for spaghetti dinners served in all the restaurants in a community. Start by clicking on the Reset button to make sure that the price of tacos, the price of wine, and the average income in the community are set to their initial values. With the initial price of $15 per spaghetti dinner, write down the quantity demanded. Then reduce the price of tacos to $2 and increase the average income in the community to $60,000. Observe the new quantity demanded.

7.2. What can you conclude from the change in the quantity of spaghetti dinners demanded that is caused by the decrease in the price of tacos and the increase in average income?
A. When there is a change in the price of tacos, and income changes at the same time, we can't say anything for certain about either the law of demand or whether spaghetti and tacos are complements.

B. Tacos are sometimes complements with spaghetti dinners.

C. The law of demand does not hold when two goods are substitutes.

Explanation / Answer

I can't see the graph, but I will try to walk you through the problem, so you can solve it. We can use the process of elimination to figure out the answer. Start with C. When two goods are substitutes it means that they are interchangable. So if the price of one goes up then the quantity demanded of the other increases. This is what the law of demand states. That if the price of something increases that the demand for that item will decrease. So C is false. If goods are complements that means when the price of its complement good decrease its demand will increase. So looking at the graph if the quantity of speghetti's demanded increases after the price of tacos decrease that means they are complement goods. I believe A. to be the correct answer. Because income is changing as well as the price of taco's we cannot be certain of their relationship because we don't know if the change in quantity demanded is due to the increase in income or the price change of taco's. The consumers could be changing their purchasing preferences because of their change in income or because taco's are relatively cheaper

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