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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

The computer market in recent years has seen many more computing sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each.

a. A rise in demand

b. A fall in demand

c. A rise in supply

d. A fall in supply

(a)

To determine

To understand: If shift in demand or supply has impacted the computer market, especially the pricing of the computers in the recent years.

  1. To sketch: The demand and supply diagram for a rise in demand.
Explanation

Given the fact that the prices fall while the quality demand is growing high, it is obvious that the supply has increased. Graphically, it can be shown with a rightward shift in the supply curve. Other goods come as complementary ones and they can be termed as substitutes simply. The demand for the same is quite fluctuating all the time.

The higher price for such substitutes may have reverse effect.

(b)

To determine

To sketch: The demand and supply diagram for a fall in demand.

(c)

To determine

To sketch: The demand and supply diagram for a rise in supply.

(d)

To determine

To sketch: The demand and supply diagram for a fall in supply.

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