Suppose widgets and gadgets are substitutes in consumption, but gadgets are required as an input to

Suppose widgets and gadgets are substitutes in consumption, but gadgets are required as an
input to the production of widgets. Suppose the price of gadgets increases. Given this
information and holding everything else constant, how does this affect the equilibrium price and
quantity of widgets? Relative to the initial equilibrium price and equilibrium quantity of widgets

a) The equilibrium price of widgets decreases and the equilibrium quantity of widgets increases.
b) The equilibrium price of widgets increases and the equilibrium quantity of widgets is
indeterminate.
c) The equilibrium price of widgets is indeterminate and the equilibrium quantity of widgets
increases.
d) The equilibrium price of widgets increases and the equilibrium quantity of widgets decreases




Economics 102 midterm fall2017 - university of Waterloo