ECONOMICS
ELASTICITY OF DEMAND
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
a fall in disposable incomes
|
|
|
a fall in the price of cinema tickets
|
|
|
a fall in the price of compact discs
|
|
|
a fall in the price of video recorders
|
Detailed explanation-1: -The most likely result is (d.) The supply of compact disc players will increase. When the price of compact discs falls, demand for the discs will increase.
Detailed explanation-2: -A drop in the price of a compact disc shifts the demand curve for prerecorded tapes leftward. From that you know compact discs and prerecorded tapes are. normal goods.
Detailed explanation-3: -Reason: Since the compact discs and compact disc players are complements of each other, they are jointly demanded. In this case, when the price of the compact disc player decreases, people will start demanding more quantities of compact disc as well. As a result the demand for compact discs will also increase.
Detailed explanation-4: -Question: Which of the following changes would most likely increase the price of music CDs? Answer: Online music services are substitutes for music CDs. If their popularity decreases, the demand for music CDs will increase, resulting in an increase in the price of the CDs.
Detailed explanation-5: -Answer and Explanation: The correct option is option d). A news report that CD prices are expected to double at the end of the month will most likely shift the demand curve for audio CDs to the tight, i.e., increase the demand for CDs.