discussionsectionhandout3fall2007

discussionsectionhandout3fall2007 - Econ 102: Fall 2007...

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Econ 102: Fall 2007 Discussion Section Handout #3 1. Supply and Demand: The graph to the left represents the domestic demand and supply for Apple’s Ipod. What happens to the demand and supply curves as well as equilibrium price and quantity with the following changes? (a) The prices of earphones and Ipod cases drop. (b) The price of downloading music on-line increases. (c) Creative, a competitor of Apple, lowers the price of all their mp3 players? (d) Suppose Brad Pitt and Angelina Jolie show their newborn kid on TV and name their kid after “Ipod”. (e) Suppose Ipods are made in China, and Chinese government decides to reduce tax for foreign companies in order to attract more investment. (f) Then suppose that in China the inflation (rise of general price) is so severe that the factories have to increase workers’ wages. (g) Suppose the factories used to work for Apple now realize that it’s more profitable for them to work for Creative and decided to break up with Apple.
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discussionsectionhandout3fall2007 - Econ 102: Fall 2007...

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