The word "cheap" in this sentence doesn't mean "not expensive" but rather "low-quality" or maybe "easy to break".
Answer: Possessive nouns have function as adjectives
Explanation:
Possessive nouns are showing ownership and they have an apostrophe or ''s'', or both. For example: Today's weather, Mary's book, Dog's food, Owls' eyes.
Because of that, they function as adjectives but they are still possessive nouns.
''I can't find Mary's book.''
<em>Mary's</em> is a possessive noun ( because it's telling us that the book is Mary's) and <em>Mary's</em> is functioning as an adjective and modifying the noun <em>book</em>.
Examples for possessive adjectives: This is <u><em>our</em></u> house.
Hey, that's <em><u>my</u></em> phone.
Possessive adjectives list: your, my, his, her, its, our, their. Possessive adjectives can replace noun to show ownership of something.
It seems they are asking how the dwarves and goblins being anger at Bilbo, and to compare them with the effects of Bilbo's choice in the book.