Principles_HWsolution_ch4

Principles_HWsolution_ch4 - Suggested Answers for Mankiw,...

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Suggested Answers for Mankiw, Chapter 4, Problem 4, 7, 8, 12, 13 4. a. DVDs and TV screens are likely to be complements because you cannot watch a DVD without a television. DVDs and movie tickets are likely to be substitutes because a movie can be watched at a theater or at home. TV screens and movie tickets are likely to be substitutes for the same reason. b. The technological improvement would reduce the cost of producing a TV screen, shifting the supply curve to the right. The demand curve would not be affected. The result is that the equilibrium price will fall, while the equilibrium quantity will rise. This is shown in Figure 16. Figure 16 c. The reduction in the price of TV screens would lead to an increase in the demand for DVDs because TV screens and DVDs are complements. The effect of this increase in the demand for DVDs is an increase in both the equilibrium price and quantity, as shown in Figure 17. Figure 17
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This note was uploaded on 04/23/2010 for the course ECONOMICS 2312 taught by Professor William during the Spring '09 term at 東京大学.

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Principles_HWsolution_ch4 - Suggested Answers for Mankiw,...

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