Answer
Ketchup and hot dogs are an example of complementary goods which means that they complement each other.
Market effects if prices of hot increase
For tomatoes: demand for ketchup will fall.
For tomato juice: the supply of tomatoes will fall and will increase the price of tomato juice.
For orange juice: the rise in the price of tomato juice will increase the demand for orange juice.
Work Step by Step
Ketchup and hot dogs are an example of complementary goods.
This shows that when the prices of hotdogs rise in the market, then according to the law of demand the demand for ketchup (compliment ) will fall.
Next, this means that the demand for tomatoes which is used for making tomato ketchup will also fall as the quantity demanded ketchup production reduces.
Tomatoes are one of the basic raw materials in the preparation of tomato juice and the quantity required for the production of tomatoes also falls.
Therefore, the supply of tomatoes will fall and will increase the price of tomato juice.
Since tomato juices and orange juice can be loosely considered as each substitute of each other, the rise in the price of tomato juice will increase the demand for orange juice.
