Solution: Shifts in Demand and Supply (Event A)

Exercise

Use the three-step method to analyze the effects of each event on the equilibrium price and quantity of game downloads.

  1. Event A: A fall in the price of USBs
  2. Event B: Sellers of games downloads negotiate a reduction in the royalties they must pay for each game they sell.
  3. Event C: Events A and B both occur.

Solutions:

Event A: A fall in the price of USBs

A fall in the price of USBs
    Steps
  1. D curve shifts
  2. D shifts left
  3. P and Q both fall.
 market-game-download


For more details, please contact me here.