Page 94 3.4. How do supply and demand interact to create equilibrium? Consider t

Question

Page 94 3.4. How do supply and demand interact to create equilibrium? Consider the market for tablet (like iPads and Android tablets). Suppose the average price of an iPad goes up by $20 when a major online retailer changes its sale policies. Which of the following will occur? Correct Answer(s) The supply curve for iPads will shift. The demand curve for iPads will shift. The supply curve for Android tablets will shift The price of Android tablets will increase. The demand for Android tablets will increase Incorrect Answer(s) MacBook Air

Explanation / Answer

Correct Answer:

The demand for android tablet will increase

The price of android tablet will increase

Explanation:

iPads and android tablets are substitute to each other. With rise in the price of iPad, the consumers will buy more of android tablets. It will increase the demand of android tablets. As a result, price of android tablet increases in the market in response to increase in demand.

(other alternatives are incorrect)

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