Beef and Leather Belts Are Complements in Production

question 171

Multiple Choice

Beef and leather belts are complements in production. If people's concern about health shifts the demand curve for beef leftward, the result in the market for leather belts will be a

• A) lower equilibrium price for a leather belt because there is an increase in the supply of leather belts.
• B) lower equilibrium price for a leather belt because there is a decrease in the supply of leather belts.
• C) higher equilibrium price for a leather belt because there is a decrease in the supply of leather belts.
• D) higher equilibrium price for a leather belt because there is an increase in the supply of leather belts.

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Definitions:

Corrective Taxes

Taxes imposed to correct the market outcomes by accounting for externalities and bringing the social costs and benefits into balance.

Economic Efficiency

An economic state where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Deadweight Losses

Losses in total surplus that occur when a market is not in competitive equilibrium, often due to taxes or subsidies.

Economic Efficiency

A situation where all resources are allocated in a way that maximizes the total benefit to society or minimizes waste.