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Chapter 3: Q. 7- Problems (page 72)

Identify which of the following would generate an increase in the market demand for tablet devices, which are normal goods.

a. A decrease in the incomes of consumers of tablet devices

b. An increase in the price of ultrathin computers, which are substitutes

c. An increase in the price of online apps,which are complements

d. An increase in the number of consumers in the market for tablet devices

Short Answer

Expert verified

b. and d.

Step by step solution

01

Step1. Introduction

When a good is consumed along with another, it is called complementary goods. The rise in demand of one would directly and positively affect the demand of other and vice versa.

Eg. shoes and socks.

When a good can be consumed in place of another, they are called substitutes of eachother. This rise in demand of one would negatively affect the demand of other.

Eg. Coke and Pepsi.

02

Step2. Explanation

Only b. and d. conditions increase the demand.

In b. An increase in price of substitutes will definitely shift the consumers to tablet, hence, the demand shall increase.

In d. An increase in number of consumers will increase the demand as more people are demanding the tablets.

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Most popular questions from this chapter

What are the effects of a price decrease from \(4 per portable power bank to \)2 per portable power bank on the quantities of portable power banks demanded by buyer 1 and by buyer 2 individually and combined?

What happens to ticket scalpers who are still holding tickets after an

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For each of the following shifts in the demand curve and associated price change of complement or substitute item, explain whether the price of the complement or substitute must have increased or decreased.

a.Arise in the demand for a dashboard global positioning-system device follows a change in the price of automobiles, which are complements.

b.A fall in the demand fore-book readers follows a change in the price of e-books, which are complements.

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d.A fall in the demand for physical books follows a change in the price of e-books, which are substitutes.

Consider the following diagram of a market for one-bedroom rental apartments in a college community.

a. At a rental rate of \(1,000 per month, is there an excess quantity supplied, or is there an excess quantity demanded? What is the amount of the excess quantity supplied or demanded?

b.If the present rental rate of one-bedroom apartments is\)1,000 per month, through what mechanism will the rental rate adjust to the equilibrium rental rate of\(800?

c.At a rental rate of\)600 per month, is there an excess quantity supplied, or is there an excess quantity demanded? What is the amount of the excess quantity supplied or demanded?

d.If the present rental rate of one-bedroom apartments is \(600 per month, through what mechanism will the rental rate adjust to the equilibrium rental rate of\)800?

In fig 3-7, what are the effects of a price increase from \(2 per portable power bank to \)4 per portable power bank on the quantities supplied by supplier 1 and by supplier 2 individually and combined?

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