Question

Write a one-and-a-half-page essay (double spaced, Times New Roman font size 12) explaining what happens to the market of scrapbooking stickers if the price of scrapbooks decreases. Scrapbook stickers and scrapbooks are complements and suppliers can easily supply both. In your essay, explain why and how the demand or supply (or both) change, what happens immediately after the shift before a new equilibrium is reached, and what happens to the new equilibrium price after the shift. Assuming the new equilibrium quantity increases, explain who the change in the price of scrapbooks affected the most: consumers or suppliers. Your essay must include a conclusion paragraph and must be well written with little to no grammatical errors.

Answer 1

as the meaning of complimentary goods is the set of two goods or two commodity which are said to be used together for the best results, hence example of petrol and scooter says the same thing, also if the prices of one good rises it effects the demand of another good.

for example the ink and the pen are a set of complementary goods hence if the price of pen rises it will affect the demand of ink and consumer will try to switch to the use of pencil instead of pen.

coming back to the given situation, where the scrapbook stickers and scrapbook are complementary goods and the prices of scrapbook decreases, the impact of which will increase the demand of the scrapbook stickers.

now the market will boost the supply of both the goods because the demand has increased due to low prices. on the other hand suppliers can use the advantage of the high demand and obviously by decreasing the supply of the goods they can in turn increase the prices of the f=good and vice versa.

in the state of equilibrium when demand and supply are equal of both the commodity the scenario will change to price change and hence it will be done through limiting the supply of both the product or may be either way that is increasing the price of any one of the product in case of complementary goods.

moreover, the change in prices are affected by the demand and supply of the good but in both the cases the suppliers are at the best side cause they have the privilege to run the market supply and demand while the consumers have to pay according to the supply of either goods. keeping the other factors of demand constant such as taste and preferences.