Solution to Shifts in Demand & Supply Event B



In Brief

This page includes solutions to the set of questions related to the Shifts in Demand & Supply Event B.
This helps learners to ensure their learning on aspects of economics in general but also shifts in demand and supply event B mentioned in the exercise section.

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 B: Sellers of games downloads negotiate a reduction in the royalties they must pay for each game they sell.

Sellers of games downloads
    Steps
  1. S curve shifts
  2. Royalties are included in the sellers' costs
  3. P decreases, Q increases
 market-game-download-2


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