Figure 3-8
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A).If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance,a complement to motorcycles,the equilibrium could move to which point?
A)A
B)B
C)C

Question

Figure 3-8 
-Refer to Figure 3-8.The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A).If there is an increase in the wages of motorcycle workers and an increase in the price of motorcycle insurance,a complement to motorcycles,the equilibrium could move to which point?
A)A 
B)B 
C)C

Quizplus · Accepted Answer

An increase in wages for motorcycle workers would increase production costs, shifting the supply curve leftward. An increase in the price of motorcycle insurance, a complement, would decrease demand, shifting the demand curve leftward. Both shifts would move the equilibrium to a point like E, where both supply and demand have decreased.