Answer :
Final answer:
An increase in the price of lettuce will decrease the quantity demanded of lettuce and likely cause the demand, and consequently the equilibrium price and quantity, for salad dressing to fall, as they are complementary goods. This is different from a decrease in the supply of lettuce, which is not indicated merely by a price increase.
Explanation:
When the price of lettuce increases, we should analyze the effects on both the market for lettuce and related markets, such as salad dressing. Assuming lettuce and salad dressing are complementary goods, an increase in the price of lettuce would generally lead to a decrease in the quantity demanded of lettuce, not a shift in the demand curve itself. Consumers will buy less lettuce at the higher price point, following the law of demand.
Furthermore, if people are buying less lettuce, they'll likely need less salad dressing. This would cause a decrease in the demand for salad dressing, given that it is a complementary good to lettuce. With the demand for salad dressing falling, we would likely see both the equilibrium price and quantity of salad dressing decrease in the market, as the whole demand curve for salad dressing shifts to the left.
It is important to distinguish between a movement along the demand curve due to a change in price (quantity demanded), and a shift in the demand curve itself, which represents a change in demand. The supply of lettuce would not necessarily decrease due to an increase in price; supply would only decrease if there were a factor that makes lettuce more difficult or expensive to produce.
The true statement about the impact of an increase in the price of lettuce is the P* and quantity of salad dressing will fall.
What is the impact?
The term impacts The feeling you leave on this life and others is your legacy. You have the ability to become responsible for your actions and be designate of your path. You can be measured about your influence and your impact.
As, the decreases of demand will cause the price of the equity to fall. As the given value of decreases, as there were the increases of the supply and the all other things are unchanged. The causes of the price will the equity to fall.
Therefore, option (D) is correct.
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The right option is follows.
The demand for lettuce will decrease
The supply of lettuce will decrease
The P* and quantity of salad dressing will rise
The P* and quantity of salad dressing will fall
Both A and D are true
