The Relationship Between Bagels and Cream Cheese Prices

If bagels and cream cheese are complements and the price of cream cheese increases, what do we expect?

If bagels and cream cheese are complements and the price of cream cheese increases, what would be the impact on the demand for bagels?

Answer:

If bagels and cream cheese are complements and the price of cream cheese increases, we would expect a decrease in the demand for bagels.

Complementary goods are products that are typically consumed together. When the price of one complement increases, it generally leads to a decrease in the demand for the other complement. In this case, bagels and cream cheese are complements, often enjoyed together.

If the price of cream cheese increases, consumers may find it less affordable or less attractive to purchase cream cheese. As a result, they are likely to reduce their consumption of cream cheese. Since bagels are commonly consumed with cream cheese, the decrease in demand for cream cheese would likely lead to a decrease in the demand for bagels as well.

This is because the two goods are closely related in consumption, and a change in the price of one affects the demand for the other. Hence, if the price of cream cheese increases, we would expect a decrease in the demand for bagels.