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18 February, 15:11

What happens to the demand for nails if the price of lumber increases significantly?

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  1. 18 February, 15:28
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    The demand for nails will decline

    Explanation:

    Lumber and nails are considered to be complimentary goods as they are used together. As such, when lumber is purchased, nails are purchased also for use together with the lumber.

    Accordingly, if the price of lumber increases significantly, the demand for lumber is expected to fall. Thus, the demand for nails is also expected to fall as users demand less of nails due to the decrease in the demand for lumber.
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