Ham and Eggs Are Complements

question 498

Multiple Choice

Ham and eggs are complements. If the price of ham rises, the demand for eggs will

• A) increase or decrease but the demand curve for ham will not change.
• B) decrease and the demand curve for ham will shift rightward.
• C) not change but there will be a movement along the demand curve for eggs.
• D) decrease and the demand curve for eggs will shift leftward.

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Definitions:

Equilibrium Price

The cost at which the amount of a good consumers want to buy matches the amount producers are willing to sell, achieving a state of equilibrium in the market.

Allocative Efficiency

A state of the economy in which production is in line with consumer preferences; every good or service is produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.

Production Methods

Various techniques and processes used to create goods and services.

Allocative Efficiency

A state of the economy in which production represents consumer preferences; specifically, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it.