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.
To understand the effect on price (P) and quantity (Q) in this scenario, let's analyze it further.
Given that demand decreases (leftward shift of demand) due to the reported health concern associated with cell phones, and supply increases (rightward shift of supply) because the cost of electronic chips used in cell phones decreases, we can deduce the following:
1. Price (P): Based on the decrease in demand and increase in supply, it is highly likely that the price of cell phones will decrease. This is because a decrease in demand puts downward pressure on prices and an increase in supply tends to lower prices as well.
2. Quantity (Q): The effect on quantity is uncertain or ambiguous, as you correctly mentioned. The conflicting forces of decreasing demand and increasing supply create a situation where the change in quantity is not explicitly determined. Depending on the magnitude of these shifts and other market factors, quantity could both increase or decrease. Therefore, drawing the graph may show different scenarios where Q either increases or decreases.
It's important to note that without specific data on the magnitude and slopes of the demand and supply curves, it is challenging to accurately determine exactly how price and quantity will be affected in this specific scenario.