Indicate whether the following events would cause an "increase or a decrease in demand
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"
or an "increase or a decrease in the quantity demanded"
for cable-based Internet access service, which is a normal good.
Part 2
a.
Firms providing wireless (an alternative to cable) Internet access services reduce their prices. This will cause a(n)
Part 3
A.
increase in demand.
B.
increase in quantity demanded.
C.
decrease in quantity demanded.
D.
decrease in demand.
The answer is D. decrease in demand.
b. Firms providing cable-based Internet access services reduce their prices. This will cause a(n)
Part 5
A.
increase in demand.
B.
decrease in quantity demanded.
C.
increase in quantity demanded.
D.
decrease in demand.
The answer is A. increase in demand.
wrong answer.
A change in a good's own price leads to a change in quantity demanded for any given demand curve, other things held constant, which results in a movement along the demand curve.
I apologize for the incorrect answer. You are correct. A reduction in the price of cable-based Internet access services would result in an increase in the quantity demanded (movement along the demand curve), not an increase in demand. The correct answer is C. increase in quantity demanded.
c.
There is a decrease in the incomes earned by consumers of cable-based Internet access services. This will cause a(n)
Part 7
A.
decrease in quantity demanded.
B.
increase in demand.
C.
decrease in demand.
D.
increase in quantity demanded.
The correct answer is A. decrease in quantity demanded. A decrease in the incomes earned by consumers of cable-based Internet access services would lead to a decrease in their purchasing power. As a result, they would be less able or willing to afford the service, leading to a decrease in the quantity demanded.
wrong answer.
A change in a good's own price leads to a change in quantity demanded for any given demand curve, other things held constant which results in a movement along the demand curve, not a shift of the curve. The good's own price did not change in this case.
Apologies for the mistake. You are correct. A decrease in incomes earned by consumers of cable-based Internet access services would result in a decrease in the quantity demanded (movement along the demand curve) and not a shift of the demand curve itself. The correct answer is indeed A. decrease in quantity demanded.
No C is the answer.
Factors other than the price of the good that affect the amount demanded are (1) income, (2) tastes and preferences, (3) the prices of related goods, (4) expectations, and (5) market size (the number of buyers). This change represents a change in consumer incomes and since cable-based satellite Internet service is a normal good, as income decreases, demand will decrease.