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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 4, Problem 1DQ
Textbook Problem
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How often do you rent videos? Would you do so more often if a rental cost half as much? Distinguish between your demand curve for home videos and your “quantity demanded” at the current price.

To determine

To distinguish between the demand curve and the quantity demanded of rental videos at current price.

Explanation of Solution

Fall in the rental cost of videos by half would lead to an increase in the quantity demanded as per the law of demand.

The quantity demanded for the rental videos would rise due to fall in rental rate. There will be a movement along the demand curve.

With changes in the prices of video rental, the quantity demanded changes and due to fall in price, there would be a downward movement in the demand curve from left to right.

The difference between changes in quantity demanded and demand is shown as follows:

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