"Because Chips and Salsa Are Complements, an Increase in the Price

question 3

Multiple Choice

"Because chips and salsa are complements, an increase in the price of chips will cause the demand for salsa to decrease.This initial shift in demand for chips results in a higher price for chips; this higher price will cause the demand curve for chips to shift to the right." Which of the following correctly comments on this statement?

• A)The statement will be true if consumer tastes for chips and salsa do not change.
• B)The statement is false because a change in the price of chips would not change the demand for chips.
• C)The statement is false because salsa is an inferior good; chips are normal goods.
• D)The statement is false because one cannot assume that chips and salsa are complements for all consumers.

---

Definitions:

Nuts

Edible seeds or fruits with a hard shell and a kernel that is eaten or used in cooking.

Berries

Small, pulpy fruits that are typically sweet or sour in taste and do not have a stone or pit, although there are exceptions.

Utility Function

A mathematical representation in economics that calculates an individual's preferred ranking of various bundles of goods, showing satisfaction levels from consumption.

Budget Constraint

A limit on the consumption bundles that a consumer can afford based on their income and the prices of goods.