Homework Help: URGENT ECON QUESTION ABOUT DEMAND AND SUPPLY

Posted by tofu on Thursday, March 22, 2007 at 7:24pm.

ok this is the scenario

12. Industry: cell phones
Event: 1.) cell phones are reported to cause brain tumors
2.) the cost of cell phone electronic chips are cheaper

so in this scenario, demand decreases and the supply increases....thus demand shifts to the left and supply shifts to the right

but what is the effect on P and Q ( price and quantity)

I know price decreases for sure....but is Q ambigious? cuz when i drew my graph, i can make it seem like Q increase or decrease

You are correct; effect on Q is ambigious or uncertain. Go with that answer.

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