You are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product Xupon (1) the demand (D) for, or supply (S) of, X, (2) the equilibrium price (P) of X and (3) the equilibrium quantity (Q) of X.Refer to the above.An increase in the price of a product which is a complement (in consumption) to X will:

Question

Quizplus · Accepted Answer

An increase in the price of a complement to X will decrease the demand for X, shifting the demand curve to the left. This will result in a decrease in the equilibrium price and quantity of X. However, the change will not affect the supply of X, so option A is incorrect. Option B is incorrect because the price of a complement to X is not a determinant of supply. Option D is incorrect because an increase in demand and an increase in price cannot both lead to a decrease in quantity.

You Are Asked to Determine, Other Things Equal, the Effects