This question has to do with shifting the demand curve and its effects on equilibrium price and equilibrium
quantity. You must answer questions 6a through 6d. Each question is worth 0.5 points apiece, for a total of 2 points.
Scenario: Suppose that the supply curve for computers stays constant-it does not shift- and the demand curve for Compaq computers shift. Using graphs and words for each scenario below, please explain what happens to equilibrium price and equilibrium quantity of computers if:
6a. consumers expect the price of Compaq computers to fall in 6 months
6b. there is an decrease in the number of buyers in the Compaq computer market
6c. the price of Dell computer rises( assuming that Compaq computers and Dell computers are substitutes)
6d. a decline in consumer incomes(assuming that computers are a normal good)
Note: For each scenario given, please label price on the y-axis and quantity on the x-axis, P1 as the initial equilibrium price, Q1 as the initial equilibrium quantity, P2 as the new equilibrium price and Q2 as the new equilibrium quantity and S1 as the initial supply curve, D1 as the initial demand curve and D2 as the new demand curve. Refer to the accompanying figure to answer this question.
6a. The expected fall in the price of a good in near future causes a decrease in the current demand for that good. The fall... View the full answer