Question : Statement 1: When the price of a complementary good increases, the demand for the main good decreases.

Statement 2: Complementary goods are consumed together, and an increase in the price of one reduces the affordability and demand for the other.

Option 1: Both statements are true.

Option 2: Both statements are false.

Option 3: Statement 1 is true, and statement 2 is false.

Option 4: Statement 1 is false, and statement 2 is true.

Correct Answer: Both statements are true.

Solution : The correct answer is (A) Both statements are true.

Statement 1: When the price of a complementary good increases, the demand for the main good decreases. This statement is true. Complementary goods are goods that are consumed together or used in conjunction with each other. When the price of a complementary good increases, it reduces the affordability or attractiveness of using that complementary good, which in turn reduces the demand for the main good. For example, if the price of coffee (complementary good) increases, it may lead to a decrease in the demand for coffee filters (main good).

Statement 2: Complementary goods are consumed together, and an increase in the price of one reduces the affordability and demand for the other. This statement is also true and supports the relationship described in statement 1. When the price of a complementary good increases, it reduces the affordability of consuming both goods together. As a result, consumers may choose to reduce or adjust their consumption of the main good, leading to a decrease in demand.

Both statements accurately describe the relationship between complementary goods, price changes, and the impact on demand.