Suppose a record company produces both swing and rhythm & blues music. An increase in the...

Suppose a record company produces both swing and rhythm & blues music. An increase in the market demand for swing music therefore tends to

A) increase the demand for rhythm & blues music.

B) increase the cost of producing rhythm & blues music.

C) decrease the cost of producing rhythm & blues music.

D) leave the cost of producing swing music unchanged.

Expert Solution

Answer - correct option is C

Reason - since record company produces both swing and rhythm& blues music , which are substitute of each other, so when the demand of swing will increase, their price will also be increased ,which will lead to increase in it's supply and since rhythm & blues music is the substitute of Swing , therefore supply of rhythm & blues will decrease and hence the decrease in supply of rhythm & blues will lead to decrease the cost of producing rhythm and blues music.

Other option as wrong since

Increase in market demand of swing music will decrease the demand of rhytm &blues music rather than increase hence option A is also wrong
Cost of producing rhythm & blues music will increase only when the there will be decrease in market demand of swing music , and in question it is given that demand of swing music is increasing hence option B is also wrong
Because the Market demand of swing is increasing its cost will also be increased rather than unchanged which is given in option D hence it is also wrong

Rahul Sunny answered 2 years ago

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