ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase Demand
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Increase Supply
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Decrease Demand
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Decrease Supply
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Detailed explanation-1: -iPhones and iPhone cases are the complementary goods since iPhone cases can be used only with iPhones. Therefore, the rise in the price of iPhones reduces the demand of iPhones and eventually, iPhone cases. In other words, the demand curve of iPhone cases shifts to left due to the increase of iPhones price.
Detailed explanation-2: -Answer and Explanation: The price elasticity of demand for the Apple iPhone is inelastic demand. Inelastic demand means when an adjustment in value causes a little change in price.
Detailed explanation-3: -iPhone is still a normal good, therefore the increase in income will cause the demand curve for iPhones to shift rightward. Additionally, the increase in one of iPhone’s production factors will shift the supply curve to the right. The overall effect is an increase in the equilibrium quantity of iPhones.