Q. Pencils and Erasers are an example of complementary goods as they are bought and used together. If there is a rise in the price of the pencils. It will induce which among the following?
Answer:
a fall in the demand for erasers
Notes:
- Pencils and erasers are complementary goods - they are generally used together.
- If the price of pencils rises, it will reduce the demand for pencils as people will buy fewer pencils due to the higher price.
- Since pencils and erasers are used together, when demand for pencils falls, the demand for erasers will also fall. This is because fewer people will buy pencils, so they will also need fewer erasers to go along with the pencils.
So, a rise in the price of pencils will induce a fall in the demand for erasers, as they are complementary products. Therefore, the correct answer is option B - a fall in the demand for erasers.