Coffee and Donuts Are Complements in Consumption

question 85

Multiple Choice

Coffee and donuts are complements in consumption. Suppose bad weather in the coffee producing regions of the world, which shifts the coffee supply curve leftward. How do the general equilibrium price and quantity outcomes compare to the partial equilibrium outcomes for this situation?

• A) General equilibrium price and quantity are higher.
• B) General equilibrium price is higher and quantity is lower.
• C) General equilibrium price is lower and quantity is higher.
• D) General equilibrium price and quantity are lower.

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Definitions:

Price of Food

The amount of money required to purchase food products, influenced by factors like supply and demand, production costs, and government policies.

Price of Clothing

The amount of money required to purchase garments, influenced by factors like brand, quality, and market demand.

Economic Stimulus Package

A set of economic measures put forth by a government to stimulate a floundering economy and promote growth.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can purchase at given prices within his or her income.