Tomato Sauce and Spaghetti Noodles Are Complementary Goods

question 33

Multiple Choice

Tomato sauce and spaghetti noodles are complementary goods. A decrease in the price of tomatoes will

• A)increase consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles.
• B)increase consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles.
• C)decrease consumer surplus in the market for tomato sauce and increase producer surplus in the market for spaghetti noodles.
• D)decrease consumer surplus in the market for tomato sauce and decrease producer surplus in the market for spaghetti noodles.

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Definitions:

Producer Surplus

The disparity between the amount sellers are ready to accept for a good or service and the price they actually receive.

Supply-and-Demand

A fundamental economic model that describes how the price and quantity of goods and services are determined in a market based on the amount available (supply) and the desire to purchase (demand).

Equilibrium Output

The level of output where the quantity of goods or services producers are willing to supply equals the quantity consumers are willing to buy, resulting in market equilibrium.

Competitive Firm

A company that operates in a market where there are many buyers and sellers, and it has little control over the market price.