Indicate whether the following events would cause an "increase or a decrease in demand or an "increase or a decrease in the quantity demanded"
for cable-based Internet access service, which is a normal good.
a. Firms providing wireless (an alternative to cable) Internet access services reduce their prices. This will cause a(n)
A.
decrease in quantity demanded.
B.
increase in demand.
C.
decrease in demand.
This is the correct answer.
D.
increase in quantity demanded.
C. decrease in demand.
rms providing cable-based Internet access services reduce their prices. This will cause a(n)
Part 5
A.
decrease in demand.
B.
decrease in quantity demanded.
C.
increase in quantity demanded.
D.
increase in demand.
D. increase in demand.
The correct answer is B. increase in demand.
Explanation: When firms providing wireless internet access services reduce their prices, it becomes more attractive for consumers to switch from cable-based internet access to wireless alternatives. This increase in the attractiveness of wireless internet access leads to a shift in consumer preferences, causing an increase in demand for wireless internet access.
To determine the effect of firms providing wireless internet access services reducing their prices on the demand for cable-based internet access service, we need to understand the difference between "demand" and "quantity demanded."
Demand refers to the overall consumer desire for a product or service at various price levels. It is influenced by factors such as price, income, consumer preferences, and availability of substitutes.
Quantity demanded, on the other hand, refers to the specific quantity of a product or service that consumers are willing and able to purchase at a given price point.
In this scenario, when firms providing wireless internet access services reduce their prices, it can be expected that more consumers will be attracted to the wireless option due to the lower prices. As a result, some consumers who were using cable-based internet access service may switch to the wireless alternative, decreasing the overall demand for cable-based internet access service.
Therefore, the correct answer is C. decrease in demand.