Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 4 - Part II - The Market Forces of Supply and Demand - Problems and Applications - Page 87: 7

Answer

If the price of hot dog increase, then ketchup demand will decrease. Decreased ketchup demand will decrease demand for tomatoes. Decreased tomato demand will decrease demand for tomato juice. Decreased tomato juice demand will decrease orange juice demand.

Work Step by Step

Hot dogs and ketchup are complements, so increasing hot dog prices would decrease ketchup demand. Ketchup and tomatoes are related goods (and tomatoes are an input for making ketchup), so decreasing ketchup demand would decrease tomato demand. Orange juice and tomato juice are substitutes, so decreased tomato juice demand would decrease orange juice demand.
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