Economics Supply and Demand Complementary Goods
The price of butter increases. In 2-3 sentences, explain how a price increase in butter affects the demand for margarine.
A price increase in butter can potentially affect the demand for margarine in two ways. Firstly, some consumers may choose to substitute butter with margarine due to its lower price. This can lead to an increase in the demand for margarine. Secondly, if margarine is viewed as a close substitute for butter, consumers may decide to reduce their consumption of both products as a result of the price increase, leading to a decrease in the demand for margarine.
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