Barbecue Sauce and Chicken Thighs Are Complement Goods

question 57

Multiple Choice

Barbecue sauce and chicken thighs are complement goods. Suppose that the government places a tax on chicken thighs to discourage the consumption of fatty meat. General equilibrium analysis predicts a ____ effect on the equilibrium price and a ____ effect on the quantity of barbecue sauce than partial equilibrium analysis.

• A) larger; larger
• B) larger; smaller
• C) smaller; larger
• D) smaller; smaller

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Definitions:

Issue Price

The price at which a new issue of securities (like stocks or bonds) is offered to the public by an issuer.

Decrease Rate

The rate at which a quantity is reduced over a specific period of time.

Weight Loss

The reduction of the total body mass, with an aim to improve fitness, health, and/or appearance.

Strip Bond

A debt security that has had its main components, such as principal and coupon payments, separated into individual parts and sold as zero-coupon bonds.