Market Equilibrium Test - 2

Deficient demand refers to the situation when aggregate demand (AD) is less than the aggregate supply (AS) corresponding to full employment level of output in the economy.

Supply  is not constant over time. It constantly increases or decreases. Whenever a  change in supply  occurs, the  supply  curve  shifts  left or right. There are a number  of factors that cause a shift  in the  supply  curve: input prices, number of sellers, technology, natural and social  factors, and expectations

Complementary good or complement is a good with a negative cross elasticity of demand, in contrast to a substitute good. This means a good 's demand is increased when the price of another good is decreased. ... When two goods are complements, they experience joint demand.
A complementary good is a good whose use is related to the use of an associated or paired good. Two goods (A and B) are complementary if using more of good A requires the use of more of good B. For example, the demand for one good (printers) generates demand for the other (ink cartridges).

The correct option is C.

Supply of goods are inversely related with cost of production. This means higher the cost of production , lower will be supply of goods as the profits will reduce. Increase in taxes will increase cost of production and reduce the profits for the firms  , so they will supply less goods .Hence the supply curve will shift towards the left. Also since the prices of the goods will increase, demand for goods will decrease. Hence the demand curve will shift towards the left.