The price of shoes rises. Shoes and socks are used together. With a fixed number of firms producing socks, which of the following correctly gives the effect on the market for socks?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → The demand curve for socks shifts leftward, so the equilibrium price and quantity of socks both fall
Shoes and socks are complementary goods. When shoes cost more, people buy fewer shoes and so fewer socks at every price. The demand curve for socks shifts to the left.
Option (1) There is only a movement along the demand curve for socks, so the price of socks stays the same — Incorrect. A movement along the demand curve comes from a change in the price of socks itself. Here the price of another good has changed, so the curve shifts.
Option (2) The demand curve for socks shifts rightward, so the equilibrium price and quantity of socks both rise — Incorrect. Demand would shift right if the price of a substitute rose. Shoes are a complement of socks, so demand shifts left.
Option (3) The supply curve of socks shifts leftward, so the price of socks rises and the quantity falls — Incorrect. The price of shoes does not change the cost of making socks. So the supply curve of socks stays where it is.
Option (4) The demand curve for socks shifts leftward, so the equilibrium price and quantity of socks both fall — Correct. With supply unchanged, a leftward demand shift creates excess supply at the old price. Sellers cut the price, and the new equilibrium has a lower price and a lower quantity.
This question uses Theory of Consumer Behaviour and Market Equilibrium together.
NCERT (2026-27): “Demand Shift … Similarly if the demand curve shifts leftward to DD1, as shown in panel (b), at any price the quantity demanded will be less than what it was before the shift. Therefore, at the initial equilibrium price p0 now there will be excess supply in the market equal to q'0 q0 in response to which some firms will reduce the price of their commodity so that they can sell their desired quantity. The new equilibrium is attained at the point F at which the demand curve DD1 and the supply curve SS0 intersect and the resulting equilibrium price p1 is less than p0 and quantity q1 is less than q0. Notice that the direction of change in equilibrium price and quantity is same whenever there is a shift in demand curve.” Introductory Microeconomics, Chapter 2 (Theory of Consumer Behaviour): “2.4.4 Substitutes and Complements … Goods which are consumed together are called complementary goods. Examples of goods which are complement to each other include tea and sugar, shoes and socks, pen and ink, etc. Since tea and sugar are used together, an increase in the price of sugar is likely to decrease the demand for tea and a decrease in the price of sugar is likely to increase the demand for tea. Similar is the case with other complements. In general, the demand for a good moves in the opposite direction of the price of its complementary goods.” |