If good P and Q are jointly demanded, an increase in the price of P...

Economics

WAEC 2008

If good P and Q are jointly demanded, an increase in the price of P will likely

A. leave the demand for Q constant but reduce the quantity demanded of P
B. reduce the quantity of P but increase the Price of Q
C. Increase the quantity supplied of Q
D. decrease the quantity demanded of Q

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Correct Answer: Option D

Explanation

Joint demand is when you need two goods because they work together. If two goods are in joint demand they will have a high and negative cross elasticity of demand. This means a rise in the price of one will lead to a decrease in the demand for the other. Therefore option D is correct. An increase in the price of P, will lead to a decrease in the quantity demanded of Q.

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