Question

What effect will each of the following have upon the supply of television sets in a competitive market? Explain your reasoning in each case.

(a)   an increase in the price of electronic equipment used in producing television sets

(b)   a decline in the number of firms producing television sets

(c)   a large new tariff on imported TV sets

(d)   new inexpensive satellite dishes which make televisions more popular among consumers

Answer 1

A)it's obvious that if the equipment cost of a TV set increases its total production cost also increases hence the selling price of the TV set has to be increased in order earn profits ,since the customers do not get satiated with the cost price they look for alternatives.the retailers who have been conventional regarding to market prices also want to decrease the supply of television sets.hence the supply of television sets will be automatically decreased but if the demand for that TV sets is high the supply of TV sets will not be lowered.

B)with the decreasing number of firms producing TV sets the production also decreases hence the number of TV sets will be low and the supply will be less.however if the demand is high the available firms want to increase the production to meet the demand or they want to sell the TV sets at higher prices and try to make it a monopoly hence the customers have no choice but to buy them.the supply will not be less if the demand is high it is number of TV sets will low owing decreased find producing them.

C) tariffs do have an impact on the supply of the goods but the common doesn't understand the whole process it is the dealers and retailers who want to import who want to import the TV sets have an effect on the supply .If the dealers decide to cut down the number of TV sets they trade the supply will be less ,if the dealers who don't mind the high prices and they also increase the selling price the supply will not be less.

D) when several offers present in the market that attract the customers to crave for them customers usually want to avail the offers hence if the popularity increases the supply will be high taking the publicity and popularity of TV sets in mind.