Question

Question:

part 1:

What happens to the demand for sony color television sets when each of the following changes occurs?

a) The Price of Zenith color television sets rises. _______________.

b) The Price of sony rises. ____________.

c) Personal income falls (color television are normal goods)._______________.

d) Technological advances result in dramatic Price reductions for Video tape recorders. ________________.

e) Congress is persuaded to impose tariffs on Japanese television sets starting next year.

part 2:

What happens to the supply of random access memory (RAM) chips, a component in the manufacture of personal computers, when each of the following changes occurs?

a) Two huge manufacturing plants begin operation in South Korea? ___________________

b) Scientists discover a new production technology that will lower the cost of making RAM chips? _________________________.

c) The price of silicon, a key ingredient in RAM chip production, rises sharply.? _________________.

d) The Price of RAM increases. __________________.

e) The Market for personal computers turns sour and RAM chip makers now expect RAM chip Prices to fall by 25 percent next quarter, ___________________.

part 3

Question:

"the salaries of chief executive officers (CEOs) are unreasonably high" Critically evaluate this statement.

Answer 1

1. a) If the price of Zenith color television sets rises then the demand for sony television will increase. This is so because people are more likely to prefer Sony at a lower price then Zenith.

b) If the price of Sony rises then it's demand will decrease.

c) if personal income falls then demand for Sony will decrease. Since color television is a normal good then its demand decreases with decrease in income.

d) Video tape recorder and color television are complementary to each other. Therefore, technological advances result in dramatic price reduction in Video tape recorder will increase the demand for Video tape recorder and as a complementary good the demand for sony color television also increase.

e) Sony is a Japanese company. Now if Congress is persuaded to impose tariffs on Japanese television sets in the next year, then people expect that the price of sony television will increase from next year. As a result of such type of expectation the demand for sony television will increase.

part 2:

a) The supply of RAM will increase.

b) Supply will Increase.

c) Supply will decrease

d) Supply of RAM will increase.

e) Supply of RAM will increase.

Part 3:

The salaries of CEOs are determined by supply and demand. The demand for CEO is greater than the supply so the salaries of CEOs are high. If supply were greater or smaller, then the salaries of CEO would be lower..