Question

1) when the price of a compliment (cream) decreases, the demand for the related good (coffee)

A) will shift inward

B) will fall

C) will shift outward

D) remains constant

2) other things being equal, an increase in wages paid to workers in firms making digital devices will cause

A) the supply of digital devices to decrease

B) the quantity of digital devices supplied to decrease

C) the demand for digital devices to decrease

D) the quantity of digital devices demanded to decrease

Answer 1

1) There is negative relationship between the price of compliment(cream) and the quantity demand of its related goods (coffee). Hence when the price of a compliment (cream) decreases, the demand for the related good (coffee), increases. So the demand curve of coffee shift rightward(outward).

Hence option C is the correct answer.

2.

When the cost of production increases, the supply curve of the goods shift leftward or supply decrease because the profit decreases with the increase in the cost. Hence when other things being equal, with an increase in wages paid to workers in firms making digital devices leads to an increase in the cost of production, so it will cause decrease in the production and the supply curve will shift leftward or inward. The supply decrease becuase it is happening due to the decrease in the wage which is an input price, here the price of of the digital is not changing, so the supply of digital device decreases and as a result the supply curve shift leftward.

Hence option A is the correct answer.