Microeconomics homework?

Question

The price of snowboards decreases. How does this affect the market for snowboarding helmets?

a) Does the demand curve shift to the left, or shift to the right, or not shift at all? Explain why, don't just give the answer.

b) Does the supply curve shift to the left, or shift to the right, or not shift at all? Explain why, don't just give the answer.

c) Does the equilibrium price increase or decrease, or is the change indeterminate?

d) Does the equilibrium quantity increase or decrease, or is the change indeterminate?

Answer 1

a. the demand of snow boarding helmets will shift to the right because snow helmets are complements of the snowboards.

b the shift in demand will lead to an increase in price and hence the supply will move and increase but it will not shift as price change doesnot shift the supply but it moves along the same curve

c. as demand shifts right wards it puts upward pressure on equilibrium price and it goes up

d. the equilibrium qty also increases as demand and quantity supplied both have increased hence the equilibrium quantity will increase

Answer 2

.

Answer 3

Snowboards and snowboarding helmets are complementary goods.  

a)  If the price of snowboards decreases people will be more inclinded to buy snowboards.  Since they need snowboarding helmets to go snowboarding the demand curve for snowboarding helmets shifts to the right because there is increased demand.

b)  The supply curve does not shift at all.  

c)  If the demand curve shifts to the right then the equilibrium price increases.  If more people want to buy snowboarding helmets then the price will increase.

d)  If the demand curve shifts to the right then the equilibrium quantity increases.  If more people want to buy snowboarding helmets than the number of helmets will increase.

Hope this helps you!