Consider the market for smartphones. Explain whether the following events would cause an increase or a decrease in supply
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or an increase or a decrease in the quantity supplied.
Part 2
a. The price of touch screens used in smartphones declines. This will cause a(n)
Part 3
A.
increase in supply.
B.
increase in quantity supplied.
C.
decrease in supply.
D.
decrease in quantity supplied.
The correct answer is A. increase in supply.
When the price of touch screens used in smartphones declines, it becomes cheaper for smartphone manufacturers to produce smartphones. As a result, they are more willing and able to supply a larger quantity of smartphones at each price level. This causes an increase in supply, shifting the supply curve to the right. It is important to note that this event does not directly affect the quantity supplied, which refers to the specific amount of smartphones supplied at a given price level.
Equilibrium quantity would
a. increase
b.
decrease
The correct answer is a. increase.
When there is an increase in supply (as mentioned in the previous answer), it leads to a new equilibrium being established in the market. In this new equilibrium, the quantity supplied will be higher than before. This is because the increase in supply causes a surplus of smartphones, which prompts sellers to lower their prices to sell off the excess inventory. As a result, consumers are able to purchase a greater quantity of smartphones at the new, lower price. Therefore, the equilibrium quantity of smartphones will increase.
Equilibrium price would
a. increase
b.
decrease
Apologies for the confusion in the previous response.
Given that there is an increase in supply of smartphones, it creates a surplus in the market. To clear this surplus, sellers would need to reduce prices in order to stimulate demand and sell the higher quantity supplied. As a result, the equilibrium price would decrease, leading to a new price level at which quantity supplied equals quantity demanded.
Therefore, the correct answer is b. decrease.
b. The price of machinery used to produce smartphones increases. This will cause a(n)
Part 6
A.
increase in supply.
B.
increase in quantity supplied.
C.
decrease in supply.
D.
decrease in quantity supplied.
The correct answer is C. decrease in supply.
When the price of machinery used to produce smartphones increases, it raises the production costs for smartphone manufacturers. As a result, they are less willing and able to produce smartphones at each price level. This leads to a decrease in supply, shifting the supply curve to the left. It's important to note that this event does not directly affect the quantity supplied, which refers to the specific amount of smartphones supplied at a given price level.
Equilibrium quantity would
a. increase
b. decrease
The correct answer is b. decrease.
When there is a decrease in supply (as mentioned in the previous answer), it leads to a new equilibrium being established in the market. In this new equilibrium, the quantity supplied will be lower than before. This is because the decrease in supply means there is less quantity available to be supplied at each price level. As a result, consumers will be able to purchase a smaller quantity of smartphones at the new, higher price. Therefore, the equilibrium quantity of smartphones will decrease.
Equilibrium price would
a. increase
b. decrease