I am learning the basics of Supply/Demand, and I came across this question (it's not a part of my homework; I just want to know the answer/explanation because I'm doing some extra practice problems for a test).
Question: "Starch from the stalks of potato plants is used to make packing peanuts, a complement in production. A decrease in potato demand that lowers potato prices will cause which of the following in the packing-peanut market?"
So, we know potato prices decrease, and potatoes are a complement in production. From what I've learned, a decrease in the price of a complement in production leads to a decrease in supply of the original good (ie decrease in potato prices leads to decrease in supply of packing peanuts).
Now, what I don't understand is how demand plays a factor. I know that when the price of a complementary good is decreased, demand for the original good increases. But what's different in this case is that potatoes are a complement in production, NOT consumption. From the examples given in the text, everytime they mention how changes in complement goods affect demand, they are referring to a complement in CONSUMPTION.
What I'm confused about is potatoes' relationship to packing peanuts. Potatoes are a complement in production, so I'm thinking it shouldn't have any affect on demand for packing peanuts, since consumers are not concerned with processes of production, right? (So my answer would be that a decrease in potato prices leads to a DECREASE in supply of packing peanuts and NO CHANGE in demand of packing peanuts).