Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially...

Assuming a normal market, with a positively sloped supply and negatively sloped demand, which is initially in equilibrium. Given the situation stated below, fill in the blanks matching the effect as either: increase, decrease, no change or indeterminate (cannot determine).

Market for IBM computers

Technology improves for the production of IBM computers, and consumers preferences for Apple computers increases due to Apple's unique application programs

(a)	Supply will (Click for List) increase not change decrease is indeterminate (unable to determine)
(b)	Demand will (Click for List) not change increase is indeterminate (cannot determine) decrease
(c)	Equilibrium price will (Click for List) not change increase decrease be indeterminate (unable to determine)
(d)	Equilibrium quantity will (Click for List) decrease increase be indeterminate (unable to determine) not change

Solutions

Expert Solution

The improvement in technology reduces the cost of producing IBM computers and hence the supply curve shifts outwards indicating an increase in supply.

The demand for IBM computers decline and the demand curve shifts inwards.

a) supply will increase.

b. Demand will decrease.

c. Equilibrium price decrease.

d. Equilibrium quantity will indeterminate.

Rahul Sunny answered 1 year ago

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