Give scenarios will shift demand in the market for the market for cable televisi
ID: 1153185 • Letter: G
Question
Give scenarios will shift demand in the market for the market for cable television in a particular city. Briefly answer the following questions for each scenario. (a) Which of the demand shifter variable (PYNTE) is affected?
(b) Will demand increase or decrease as a result of the change?
(c) Which way does the demand curve shift (right or left)?
(d) Assuming supply remains the same, what happens to equilibrium price and quantity after the shift? Will they increase or decrease?
Scenario #1: A booming economy increases the income of consumers. Scenario #2: The cable company becomes known for poor customer service. Scenario #3: The price of satellite television service decreases. Scenario #4: A large number of people move into the city. Give a scenario for each of the following above.
Explanation / Answer
1. When the income of the consumers increases the demand for the goods and services increases, so there is increase in the demand for cable tv. The demand curve will shift to the right. Due to the increased demand the equilibrium price will go up and quantity of output produced will increase.(income)
2. In this situation the poor customer service decreases the demand for the cable tv so it is a leftward shift in the demand curve. This will bring down the equilibrium price and output.(expectaions)
3. The satelite televison is a substitute good for the cable televison so when there is a decrease in the price of substitute good the demand decreases so the demand curve will shift to the left. This will bring the reduce the equilibrium price and output.(price of related goods)
4. The migration of people into cities will reduce the demand for cable televisions and it is a leftward shift in the demand curve. This will also reduce the equilibrium price and quantity.
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