Mahir: G11 Econ Price Mechanism exercise - Explanation A company produces both smartphones and tablets These diagrams show the increase in the supply of

Mahir: G11 Econ Price Mechanism exercise - Explanation A...

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Explanation:A company produces both smartphones and tablets. These diagrams show the increase in the supply of smartphones because of the increasing sizeof smartphones and the inconvenience of carrying a tablet around makes consumers attracted to smartphones, and move away from tablets. This gives retailers the signal that customers are very interested in buying smartphones (there is high demand), thus enabling them to increase the price of smartphones, as it is in demand and people will presumably still buy the same amount of smartphones. The increase in price of smartphones gives retailers an incentive to increase the supply (amount of smartphones they will supply). Since, tablets around not in

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