Beef and leather belts are complements in PRODUCTION (in other words, when the o

Question

Beef and leather belts are complements in PRODUCTION (in other words, when the output of beef increases, the output of leather belts increases as well, and vice versa). Assume that the markets for beef and leather belts are initially in equilibrium. Suppose that concern about health and diet shifts the demand curve for beef leftward. Use supply and demand analysis to determine what will happen in the market for leather belts. In other words, determine (a) if there will be any shift in the demand for leather belts; (b) if there will be any shift in the supply of leather belts; (c) if the equilibrium price of leather belts will increase, decrease, or stay the same; (d) if the equilibrium quantity of leather belts will increase, decrease, or stay the same.

Explanation / Answer

a) if there will be any shift in the demand for leather belts; yes price of beef will reduce but price of belt will increase because of increase in demand of belt created due to shortage of supply as a result demand is high but due to lack of supply price go high of belt b)if there will be any shift in the supply of leather belts; yes since raw material is unavailable supply will be scarce c) price of beef will reduce due to over supply and same demand d) price of belt will increase due to reduced suppy

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