Answer to Question #57858 in Macroeconomics for tom

Question

Consider a market of MP3 players. List one or two events related with this market which will cause the following results.a. an increase in both equilibrium price and quantity of MP3 players.b. an decrease in both equilibrium price and quantity of MP3 players.c. an increase in equilibrium price and a decrease in equilibrium quantity.d. a decrease in equilibrium price and an increase in equilibrium quantity.

Answer 1

a. an increase in both equilibrium price and quantity of MP3 players may be caused by the increase in demand for MP3 players according to change in tastes or expectations of increase of the price in the nearest future.
b. an decrease in both equilibrium price and quantity of MP3 players may be caused by the decrease in demand for MP3 players according to change in tastes or expectations of decrease of the price in the nearest future.
c. an increase in equilibrium price and a decrease in equilibrium quantity may be caused by the decrease in supply for MP3 players according to increase of inputs prices.
d. a decrease in equilibrium price and an increase in equilibrium quantity may be caused buy the increase in supply for MP3 players according to implementing of less costly production technology.