ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Peanut butter The price of jelly increases. When the price of jelly increases, the quantity demanded of jelly decreases. Because peanut butter and jelly are complementary goods, you will also want less peanut butter. Thus, the demand for peanut butter decreases.

Detailed explanation-2: -Remember that peanut butter and jelly are complements. Because we are consuming less peanut butter, we consume less jelly also, even though the price of jelly didn’t change. The demand for jelly decreases (jelly demand curve shifts inward).

Detailed explanation-3: -Question: Peanut butter and jelly are complementary goods.

Detailed explanation-4: -Peanut butter and jelly are complements. A decrease in the price of one will result in: An increase in the demand for the other.

Detailed explanation-5: -Peanut butter, as suggested by the name, is made from peanuts and jelly is a fruit spread. The fruit can be any and depending on the fruit, the name of the jelly can vary. In some countries, though the terms jelly and jam are used interchangeably, jelly is not jam. Jelly is set and sweetened vegetable or fruit juice.