Oyster crackers are a complement for clam chowder. If the price of clam chowder falls, the quantity of clam chowder demanded , which the demand for oyster crackers. Because of the change in the equilibrium quantity of oyster crackers, the demand for wheat flour by oyster crackers producers , causing the equilibrium price of wheat flour to . This means producers of bread face input prices, and the supply of bread . The resulting in the price of bread causes people to substitute , so the demand for cereal .

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Explanation:

Complementary goods are goods that are consumed together

If the price of chowder falls, the quantity demanded of chowder increases in law with the law of demand.

According to the law of demand, the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

If the quantity demanded of chowder increases, the demand for oyster increases also.

Due to the increase in the demand for oysters, suppliers would want to increase their supply of oysters. This would lead to an increased demand for inputs of which wheat flour is one of them. So, the quantity demanded of wheat would increase.

The increase in demand for flour would shift the demand curve for flour to the right and this would lead to a rise in price of flour.

The increase in price of flour would increase the cost of making bread. As a result, the supply of bread would fall. the fall in supply would lead to a rise in price of bread. As a result of the rise in price of bread, the demand for a substitute (cereal) would increase

Substitute goods are goods that can be used in place of another good.

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