(solution) Because bacon and egg are often eaten together, they are

(solution) Because bacon and egg are often eaten together, they are

  • Because bacon and egg are often eaten together, they are complements.
    • We observe that both the equilibrium price of eggs and the equilibrium quantity of bacon have risen. What could be responsible for this pattern ? a fall in the price chicken feed or a fall in the price of pig feed? Illustrate and explain your answer.
    • Suppose instead that the equilibrium price of bacon has risen but the equilibrium quantity of eggs has fallen. What could be responsible for this pattern ? a rise in the price of chicken feed or a rise in the price of pig feed? Illustrate and explain.