Referring to figures below, if shoes and socks are complements and both are normal goods, a. Explain the impact on consumption of shoes and socks if the price of shoes decreased Fint: Your answer should begin with introductory, main analysis, and concluding remark. On your answer you need to discuss the concept of budget constraints and equilibrium Socks A Shoes b. Explain the impact on consumption of shoes and socks if consumer incomes increased Fim. Tour answer should begin with introductory, main analysis, and concluding remark. On your answer you need to discuss the concept of budget constraints and equilibrium Socks Shoes c. Why indifference curves have downward slopping? Hint: Your answer should begin with introductory, main anaiysıs, and concluding remark.
In layman's terms, demand refers to what a customer wants. Demand is defined as the amount of a certain quantity required by consumers at a specific period. Price and demand, as per the law of demand, have an inverse relationship, meaning that as price rises, so does the quantity required.
An indifference curve depicts a combination of two items that provide the same level of enjoyment and utility to a person. Each point on the curve represents a person who is unconcerned with the items.
(a)
Because shoes and socks are complimentary items, a decrease in the price of shoes will increase demand for shoes, and hence for socks. In other words, as socks and shoes go together and both are normal good, a result, as the price of shoes drops, demand for socks is likely to increase. As the price drops, more will be bought. And equilibrium price and quantity will also alter from higher indifference curve A to B as demand increases.
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