Barbecue Sauce and Chicken Thighs Are Complement Goods

question 24

Essay

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.
a. What is the partial equilibrium effect of the tax on the barbecue sauce market?
b. What is the general equilibrium effect of the tax on the barbecue sauce market? Does general equilibrium analysis predict a larger or smaller effect on the equilibrium price and quantity of barbecue sauce than partial equilibrium analysis?

---

Definitions:

Prestige

The respect and admiration that an individual, occupation, or organization is held in by others, often reflecting a perceived high status or quality.

Spurious Relationship

A false or misleading correlation between two variables that appear to be connected but are actually related due to the presence of a third, hidden factor.

Control Variable

A variable that is kept constant during an experiment to ensure that any changes in the outcome are due to the independent variable.

Independent Variables

Factors in a study or experiment that are altered or adjusted in order to examine their impacts on the variables that depend on them.