Answer to Question #24584 in Microeconomics for saad

Question #24584

Silk shirts are often worn with linen trousers. If the price of linen trousers drops, in the market for silk shirts the likely effect will be:

A. P* up, Q* down

B. P* up, Q* up

C. P* down, Q* down

D. P* down, Q* up

E. A movement to the left along the supply curve.

Expert's answer

B. P* up, Q* up
Changes in the price of a substitute or complement affect demand. Changes in the price of related goods change the demand for the other related goods. A change in the price of a substitute will cause an inverse change in demand for related products, whereas a change in the price of a complement will cause a direct change in demand for related products.

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