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The price of peanuts increases. At the same time, we see the price of Jelly rise. How does this affect the market for peanut butter?

A. the demand curve will shift to the left; the supply curve will shift to the left.

B. the demand curve will shift to the left; the supply curve will shift to the right.

C. the demand curve will shift to the right; the supply curve will shift to the left.

D. the demand curve will shift to the right; the supply curve will shift to the right.

I understand that the supply curve shifts to the left, but how does the demand curve shift to the right considering the price of its complement product (Jelly) increased? I've learned that the increase in the price of a complement product makes demand decrease. Could you please explain why the answer is C.?

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Chika Ilonah
Chika IlonahLv10
28 Sep 2019

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Related questions

If aggregate demand shifts right then in the short run:

a. firms will increase production. In the long run, increased price expectations shift the short-run aggregate supply curve to the left.

b. firms will increase production. In the long run, increased price expectations shift the short-run aggregate supply curve to the right.

c. firms will decrease production. In the long run, increased price expectations shift the short-run aggregate supply curve to the left.

d. firms will decrease production. In the long run, increased price expectations shift the short-run aggregate supply curve to the right.


Determine the effect on either the aggregate demand curve (is it a rightward or a leftward shift?), the aggregate short-term supply curve, and the long-term aggregate supply curve (does the upward sloping portions of the SAS curve shift left or right, or does the vertical portion of the LAS curve shift to the right or the left?). Also determine the effect on the price level, the real output level, and employment/unemployment. Explain and express this graphically using the AS/AD macro model.




If workers begin to expect more inflation in the future, then we would expect that the short-run aggregate supply curve will shift up. If workers expect more inflation in the future, they will want their wages to increase more rapidly today. This will increase production costs at each production level, causing firms to increase prices at each production level.

If there is a shortage of product X, and the price is free to change: 
A. fewer resources will be allocated to the production of this good.
B. the price of the product will rise.
C. the price of the product will decline.
D. the supply curve will shift to the left and the demand curve to the right, eliminating the shortage

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