a. Suppose the wages of computer-factory workers rises. This will cause (the supply / the demand) ...

a. Suppose the wages of computer-factory workers rises. This will cause (the supply / the demand) of tablet computers to (shift in / shift out) , causing tablet computer price to (rise / fall) and quantity to (rise / fall) .

b. Suppose the price of notebook computers (a substitute for tablets) falls. This will cause (the supply / the demand) of tablet computers to (shift in / shift out) , causing price of tablet computers to (rise / fall) and quantity to (rise / fall) .

c. Suppose the number of tablet computer manufacturers rises. This will cause (the supply / the demand) the supply the demand of tablet computers to (shift in / shift out) , causing price to (rise / fall) and quantity to ( (rise / fall) .

d. Suppose an exciting new game is released that is only available on tablet computers. This will cause the supply / the demand the supply the demand for tablet computers to (shift in / shift out) , causing tablet computer price to (rise / fall) and quantity to (rise / fall) .

e. Suppose the prices for popular apps (complements to tablet computers) rise. This will cause (the supply / the demand) the supply the demand of tablet computers to (shift in / shift out) , causing tablet computer price to (rise / fall) and quantity to (rise / fall) .

Solutions

Expert Solution

a. Suppose the wages of computer-factory workers rises. This will cause the supply of tablet computers to (shift in), causing tablet computer price to (rise) and quantity to ( fall) .

Reason- When wage rises, input cost rises, supply falls. Given the demand , it leads to price rise and fall in quantity.

b. Suppose the price of notebook computers (a substitute for tablets) falls. This will cause ( the demand) of tablet computers to (shift in ) , causing price of tablet computers to ( fall) and quantity to ( fall) .

Reason- When price of notebook computers falls people buy more of it and less of tablets. Hence demand of tablet falls or shifts in. As a result price and quantity falls.

c. Suppose the number of tablet computer manufacturers rises. This will cause (the supply ) of tablet computers to (shift out) , causing price to (fall) and quantity to ( (rise ) .

Reason- When number of firms rises in an industry, quantity supplied rises. Since demand has not increased, price level has to fall.

d. Suppose an exciting new game is released that is only available on tablet computers. This will cause the demand for tablet computers to (shift out) , causing tablet computer price to (rise ) and quantity to (rise ) .

Reason- If the new game is only available on the tablet, tablet demand will increase. Since supply is fixed this outward movement in demand curve leads to rise in price and quantity.

e. Suppose the prices for popular apps (complements to tablet computers) rise. This will cause ( the demand) of tablet computers to (shift in ) , causing tablet computer price to (fall) and quantity to (fall).

Reason- When price of apps increases, the Demand for apps falls. Since it is complementary good of tablet computer, tablet demand also falls along with the quantity and price.

Rahul Sunny answered 2 years ago

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