my mind is going blank here..can someone chime in and help:
If a new breakthrough in manufacturing technology reduces the cost of producing cd players by half, what will happen to the demand for cd players?
Thank you for using the Jiskha Homework Help Forum. It is the "supply and demand." If the price is cut in half a lot more people will feel it is affordable! "price down = demand up"
but is it a shift or a movement?
Thank you for using the Jiskha Homework Help Forum again. A "shift" to me is a "change in direction" and a "movement" is also "change of place or position or posture." To me they are synonymous!
In economics, we refer to a change in demand as a shift in the demand curve. However, a change in quantity demanded is a movement along the existing demand curve. So, my answer would be "no change in demand", but "increase in quantity" demanded as price falls.
To determine whether there will be a shift or movement in demand for CD players due to the reduction in manufacturing costs, we need to consider the concept of demand in economics.
Demand is influenced by various factors including price, income, consumer preferences, and availability of substitutes. In this case, we can focus on the effect of a price change.
When the cost of producing CD players is reduced by half, it means that the price of CD players can be lowered as well. According to the law of demand, which states that as the price of a good decreases, the quantity demanded increases, we can expect an increase in the quantity demanded of CD players.
However, it's important to note that a change in quantity demanded refers to a movement along the existing demand curve, while a change in demand refers to a shift of the entire demand curve. In this case, since the reduction in manufacturing costs leads to a decrease in price, we can expect a movement along the existing demand curve rather than a shift.
To summarize, the demand for CD players will not change, but there will be an increase in the quantity demanded as the price of CD players decreases due to the cost reduction in manufacturing.