Sunscreen and beach towels are complementary goods. If the price of sunscreen increases, ceteris paribus
1 answer
, the demand for beach towels will decrease. This is because higher prices for sunscreen may lead people to spend less money overall on beach-related items, and they may choose to prioritize buying sunscreen over beach towels. As a result, the demand curve for beach towels will shift leftward, indicating a decrease in the quantity of beach towels that consumers are willing and able to buy at each price level. Furthermore, if the price of sunscreen decreases, ceteris paribus, the demand for beach towels will increase. This is because lower prices for sunscreen may encourage people to purchase more beach-related items and they may prioritize buying beach towels over other items. As a result, the demand curve for beach towels will shift rightward, indicating an increase in the quantity of beach towels that consumers are willing and able to buy at each price level.