Question

Examine the relationship between bagels and cream cheese are often eaten together, they are complements. consider the effect of a rise in the price of milk, an input to making cream cheese.?

Answer 1

Bagels and cream cheese are complementary goods. A rise in the price of milk, an input for making cream cheese, can decrease the supply of cream cheese. A new study stating that eating cheese is good for health can increase the demand for cream cheese.

Step-by-step explanation:

In economics, bagels and cream cheese can be considered complementary goods. Complementary goods are goods that are often consumed together because the consumption of one good enhances the consumption of the other. When the price of a key input for cream cheese production, such as milk, rises, it affects the supply of cream cheese. A rise in the price of milk decreases the supply of cream cheese by 80 pounds at every price.

Meanwhile, a new study that suggests eating cheese is good for health can impact the demand for cream cheese. Demand for cream cheese would increase by 20% at every price due to the increased health benefits associated with consuming cheese.