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Suppose you like to make, from scratch, pies filed with banana cream and vanila pudding. You notice thai the ce of bananas has increased. As a resul, your demand foe vanilla padding would:______. a) decrease.b) increase.c) be unaffected. d) There is insufficient information given to answer the question.

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segehood

Answer:

A. Decrease

Explanation:

In this case, Banana cream and Vanilla pudding are complementary goods which means that they are products used together. Complementary goods are goods with negative cross elasticity of demand. This means than an increase in the price of one good will lead to a decrease in the demand for the other good and a decrease in price for one good will lead to an increase in demand for the other good.

Here, the prices of bananas increased, as a result the demand for vanilla pudding decreases because they are goods with negative cross elasticity of demand.

A service, goods or product that adds value to each other and are used in the supplement to each other is called complementary goods. The price of goods involved affects the other goods in a complementary system.

As a result, the demand of vanilla pudding would:

Option a) Decrease

The complementary system can be explained as:

  • The goods like vanilla pudding and banana are complementary and are used together. The increased price of bananas will affect vanilla pudding sales negatively and is called negative elasticity of demand.

  • The increased cost of bananas will decrease the sales of vanilla pudding while a drop in the price of one product will raise the demand.

  • The bananas and pudding are in negative cross elasticity relation and hence the increased cost will decrease the demand.

Therefore, option a) is correct.

To learn more about complementary goods follow the link:

https://brainly.com/question/1338465

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