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Asked Oct 17, 2019
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Expert Answer

Step 1
  1. If the technology improves, while all other factors remain constant, it would lead to the shift in the supply curve. As with the slight improvement in the technology, it would lead to a new wave of more production leading to more supply in the market for iPhones and leading to falling in price and more demand in the product. The current supply would shift to the new supply curve, leading to a fall in the price from P1 to P2 and subsequently increase in quantity from Q1 to Q2 and lower Equilibrium from E1 to E2.
Price
Current Supply Curve
Demand Curve
New supply curve afte
production capacity
expansions
E1
P1
E2
P2
EO
Q1
Q2
Quantity
Apple iPhone
O
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Price Current Supply Curve Demand Curve New supply curve afte production capacity expansions E1 P1 E2 P2 EO Q1 Q2 Quantity Apple iPhone O

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Step 2
  1. If the technology improves, while all other factors remain constant, it would lead to a shift in the supply curve and an increase in the quantity supplied in the market. Gradually it would lead to lower prices and high market supply in the market as shown in the below graph. The current supply would shift to the new supply curve, leading to a fall in the price from P1 to P2 and subsequently increase in quantity from Q1 to Q2 and lower Equilibrium from E1 to E2.
Price
Current Supply Curve
Demand Curve
New supply curve afte
production capacity
expansions
P1
E1
E2
P2
EO
Q1
Q2
Quantity
Apple iPhone
O
help_outline

Image Transcriptionclose

Price Current Supply Curve Demand Curve New supply curve afte production capacity expansions P1 E1 E2 P2 EO Q1 Q2 Quantity Apple iPhone O

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Step 3
  1. If the tablet and the laptops are the substitute goods, the more increase in the supply of the tablets in the market would lead to a high supply of the tablets in the market. It would shift th...
Price
Current Supply Curve
New Tablet
Demand Curve
Old Tablet
New supply curve afte
production capacity
expansions
р3з
P1
E1
New Demand Curve
P2
EO
Q1
Q2
Quantity
аз
O3
O
help_outline

Image Transcriptionclose

Price Current Supply Curve New Tablet Demand Curve Old Tablet New supply curve afte production capacity expansions р3з P1 E1 New Demand Curve P2 EO Q1 Q2 Quantity аз O3 O

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