Question

Airline travel and car rentals are complement goods. What happens first when
the price of airline travel increases?
A. The demand curve for car rentals shifts to the right.
B. The demand curve for car rentals shifts to the left.
C. The quantity of car rentals demanded goes down.
D. The quantity of car rentals demanded goes up.

Answer 1

Answer:

D. The quantity of car rentals demanded goes up.

Explanation:

Complimentary goods are products that are used together. If Airline travel and car rentals are complementary goods, it means the two products must be used together. Either of the products will not add much value to the customer if purchased alone.  

Complimentary products have a joint demand. An increase in demand for one good leads to an increase in demand for the other product. If the demand for Airline travel rises, the demand for car rentals also increases. A decrease in demand will have similar effects.