14 Fresh cream is a substitute for ice-cream and waffles are a complement of bot

Question

14 Fresh cream is a substitute for ice-cream and waffles are a complement of both. If the price of ice-cream falls, one can expect that a) The demand for fresh cream will increase and the quantity of waffles demanded will increase. b) The demand for fresh cream will decrease and the demand for waffles will increase. c) The quantity of fresh cream demanded will decrease and the demand for waffles will increase. d) The quantity of fresh cream demanded will decrease and the quantity of waffles demanded will increase 1.5 If the price and the quantity of screwdrivers exchanged falls, it is likely that a) Demand for screwdrivers has increased. b) Demand for screwdrivers has decreased. cSupply of screwdrivers has decreased. d) Supply of screwdrivers has increased

Explanation / Answer

1.4) If the price of icecream falls then demand of ice cream will increases which leads to demand of fresh cream to decrease because of substitutes whereas demand of waffles good will increase because of complement goods.

Ans is B

1.5)ans is B

Demand of screwdrivers has been decreased leading to a leftward shift of the demand curve and thus equilibrium price and quantity both falls.

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