Question

In: Economics

The mobile phone was invented in 1973, and during the first 20 years of its life,...

The mobile phone was invented in 1973, and during the first 20 years of its life, few people used one, except as a car phone. But during the 25 years, the use of mobile phones increased dramatically and the price of mobile phone service fell.

  1. Are the substitutes for mobile phones? If so, provide an example.



  1. Do mobile phones have complements? If so provide an example.



  1. What increased the demand for mobile phones? Provide examples.



  1. What increased the quantity demanded for mobile phones? Illustrate the effect by using the demand curve for mobile phones.

Solutions

Expert Solution

a) one substitute for mobile phones is nothing but computer communication and this is because of the fact that both can be used interchangeably to each other as a result of which is the price of computer communication decreases then the demand for mobile phone decreases and vice versa

(b) one complement for mobile phones is nothing but the sim card or the network carrier that is used to make phone calls and this is because if the price of SIM card increases then it is difficult to use phones as it becomes more costly and the demand for mobile phone decrease and that is the reason why they are complements

(c) the cost of making landline calls and cost of writing letters very high and continuously is increasing and that is the reason why the demand for mobile phones rupees because people would shift from more costly methods of communication tool is costing methods as a result of which the demand curve for mobile phones shifted to the right

(d) when you say about the demand curve you have to understand the law of demand that price is inversely proportional to that of quantity demanded and that is the reason why only price in alter the quantity demanded where an increase in price decreases quantity demanded and vice versa.

Rahul Sunny answered 2 years ago
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