Price (dollars per digital camera) The graph shows the market for digital camera

Question

Price (dollars per digital camera) The graph shows the market for digital cameras If both the demand for digital cameras and the supply of digital cameras increase, then the equilibrium quantity- and the equilibrium price A. increases; might rise, fall, or not change OB. increases; falls Oc. increases; rises OD. decreases; might rise, fall or not change CDE might increase, decrease, or not change: rises 20 Now illustrate your answer to the question above Draw a pont at the market equilibrium. Label it 1 Draw a curve to shows the effect in this market when the price of a memory card falls. Label it. Draw a curve to show the effect of a technological advance that cuts the cost of producing digital cameras. Label it. Draw a pont at the new market equilibrium. Label it 2. Quantity (millions of digital cameras per year) >>> Draw only the objects specified in the question

Explanation / Answer

Answer to 1st question: Increases; might rise , fall or not change

Answer to 2nd question:

      Blank 1: 90 cars (here: Marginal cost = Marginal Benefit = $8)

      Blank 2: 60 cars (here: Marginal cost = Marginal Benefit = $11)

      Blank 3: 30 cars (i.e. 90 -60)

      Blank 4: $300 (i.e. 60 x 5)

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