Question

If the price of videogame consoles drops, we'd expect the following change in the market for videogame software discs: A. Demand for videogame software shifts right, equilibrium price and quantity both rise B. Supply for videogame software, shifts right, equilibrium price drops, equilibrium quantity rises C. Supply for videogame software shifts left, equilibrium price goes up, equilibrium quantity drops D. Demand for videogame software shifts left, equilibrium price and quantity both drop

Answer 1

Answer: A. Demand for videogame software shifts right, equilibrium price and quantity both rise

Step-by-step explanation:

Videogame software is a complimentary good to videogame consoles which means that when the price of videogame consoles decreases, there will be an increase in demand for videogame consoles because they are cheaper and this will then translate to an increase in demand for videogame software.

To show this, the demand curve for videogame software will shift to the right where it will intersect with the supply curve at a higher equilibrium price and quantity.