Coffee and Donuts Are Complements in Consumption

question 23

Multiple Choice

Coffee and donuts are complements in consumption. Suppose the economy expands so that consumer income increases, and coffee is a normal good. What impact does this change in the coffee market have on the donut market under a general equilibrium analysis?

• A) Donut demand shifts rightward and donut price and quantity increase.
• B) Donut demand shifts rightward, donut price increases, and donut quantity declines.
• C) Donut demand shifts leftward, donut price declines, and donut quantity increases.
• D) Donut demand shifts leftward and donut price and quantity decline.

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