Demand, Supply and How Markets Work: Question 8

Worked solution

Step 1: Identify the relationship between the two goods

The action figures and the matching comic books are complements, goods that tend to be bought and used together. When two goods are complements, a change in the price of one affects how attractive it is to buy them as a pair, which in turn affects demand for the other good.

Step 2: Work out the direction of the effect

The price of the comic books rises, so buying the matching comic book alongside an action figure now costs more overall. This makes the “pair” less attractive to buy, so some customers who would have bought both now buy fewer action figures, even though the action figures themselves have not become any more expensive.

Step 3: Classify this as a shift, not a movement

The price that changed belongs to a different good, the comic books, not the action figures. Since the price of action figures themselves is unchanged, this is not a movement along the demand curve for action figures; it is a change in a non-price determinant (the price of a related good), so the whole demand curve for action figures shifts.

Because fewer action figures are now demanded at every price than before, the demand curve for action figures shifts to the left: demand has decreased.

Step 4: Rule out the other options

• Option A has demand shifting right, which would only happen if the comic books were a substitute for action figures rather than a complement, or if their price had fallen.
• Option C wrongly treats this as a movement, but no change has occurred in the price of action figures themselves.
• Option D wrongly assumes that only a change in a good’s own price can affect its demand curve, ignoring the price of a related good, one of the standard non-price determinants of demand.

Final answer

A rise in the price of a complement, the comic books, makes buying an action figure less attractive overall, shifting the demand curve for action figures left, option B.