Question

Beef and leather belts are complements in production. If concern about health and diet shifts the demand curve for beef leftward, the result in the market for leather belts will be _____.

Answer 1

Answer: High in the equilibrium price for the leather belt which results into decrease in the leather belts supply

Explanation:

  According to the given scenario, both beef and the leather belts are one of the complements in the production and the beef shifts towards leftward due to the concern about the diet and the health. The supply and demand curve plays an important role in the production cycle.

The Final outcome of the leather belts in the market are basically high in the equilibrium price  and due to this the supply of the leather belts production become reduce.

 Therefore, The given answer is correct.

               

Answer 2

Answer:

Decrease in Supply ; Increase in Price

Explanation:

Complements in Production are goods which are produced jointly using a given resource. Eg : Beef , leather belts & wheat , straw.

Law of Supply states that Price of a good & its supply are directly related. Price & supply of complements in production are also directly related.

If price of a good rises, supply of the good & its complement(s) in production rise. If price of a good falls, supply of the good & its complement(s) in production fall.

So: Leftwards shift in demand curve of beef, i.e decrease in demand of beef- will create excess supply of beef. Excess supply will create competition among sellers & reduce its price.

As beef & leather belt are complements in production : Decrease in price of beef will reduce the supply of leather belts. This decreased supply (leftwards shift) will create excess demand in leather belt markets & competition among buyers increase their price.