Question

2. Suppose that Coke and peanuts are complementary goods. A decrease in the price of Coke will a. shift the demand curve for Coke to the left. b. shift the demand curve for peanuts to the left. c. shift the supply curve of Coke to the right. d. decrease the price of peanuts. e. shift the demand curve for peanuts to the right.

          2. Suppose that Coke and peanuts are complementary goods. A decrease in the price of Coke will a. shift the demand curve for Coke to the left. b. shift the demand curve for peanuts to the left. c. shift the supply curve of Coke to the right. d. decrease the price of peanuts. e. shift the demand curve for peanuts to the right.
        
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Principles of Economics
Principles of Economics
Gregory Mankiw 8th Edition
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2. Suppose that Coke and peanuts are complementary goods. A decrease in the price of Coke will a. shift the demand curve for Coke to the left. b. shift the demand curve for peanuts to the left. c. shift the supply curve of Coke to the right. d. decrease the price of peanuts. e. shift the demand curve for peanuts to the right.
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Transcript

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00:01 So here we're talking about compliments.
00:02 And remember, compliments are things that go together, right? you want to consume them together.
00:09 So if you want more of one, you also want more of the other to peer with it.
00:16 So let's try to sketch out the logic.
00:19 The first of all is the price of coke is going to go down.
00:23 That means that the quantity of coke should be going up, right? this is what you would call the law of demand, right? so the price of coke is going down, which means the quantity demanded of coke is going up.
00:38 But now, because they're complements, the quantity of peanuts should also be going on.
00:45 That's what we mean by compliments.
00:48 Complements go in the same direction, right? we have more coke because coke is cheaper.
00:57 So since we have more coke, we also want more peanuts because we consume peanuts and coke together...
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