Question

Ceteris paribus, (meaning, assuming that all other things remain constant) which of these events is likely to raise the equilibrium price of cell phones? Select one: a. An increase in the number of cell phones manufactures b. A decrease in the cost of producing cell phones due to 3D printing (a technology that allows manufacturers to print an entire product instead of assembling it c. A decrease in the number of consumers d. An decrease in income tax e. A new study that shows that cell phone is likely to cause brain cancer

Answer 1

Answer: Option D: An decrease in income tax

Explanation: as per the question other things remains constant, an decrease in the income tax due to government policy may leads to increase in disposable income in the hand of public, with the increased disposable income they may buy cell phone. So the demand for cell phone increases which results in increase in the equilibrium price of cell phone. Therefore option D is correct

Where an increase in the number of cell phone manufacturer may leads to increase in supply of cell phone. At a given demand increase in supply of cell phone many leads to decrease in equilibrium price of cell phone. Therefore option A is not correct

Decrease in the cost of production, many allow the manufacturer of cell phone to sell at a lower price to stand in the competition. Therefore option B is not correct

Decrease in the number of consumers may leads to decrease in demand for the cell phone which may results in decrease in equilibrium price of cell phone. Therefore option C is not correct

Study shows uses of cell phone may causes cancer, may significantly influence the taste and preference of the consumer, which may results in decrease in demand for cell phone. That may results in decrease in equilibrium price of cell phone. Therefore option E is not correct