ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What will happen to the demand or quantity demanded for jelly if the price of peanut butter increases? Answer: The demand curve for jelly will shift to the left (decrease). Since you would buy less peanut butter when its price increases, you will also buy less jelly (since they are complements).

Detailed explanation-2: -The demand for jelly will decrease when the price of peanut butter increases because peanut butter and jelly are complement products.

Detailed explanation-3: -Changes in the price of related goods and services Alternatively, if the price of complementary goods increases, the curve will shift inwards. The opposite is true for substitute goods. For example, if the price for peanut butter goes down significantly, the demand for its complementary good – jelly – increases.

Detailed explanation-4: -Answer and Explanation: b. News that insects have destroyed much of the peanut crop and that there will be less peanut butter on the shelves in three months will lead to an increase in demand as people will keep peanut butter for the future. This will shift the demand curve in the rightward direction.

Detailed explanation-5: -Peanut butter and jelly are complements. A decrease in the price of one will result in: An increase in the demand for the other.