Refe r to Figure 4-30. In this market for tablet computers, more suppliers enter

Question

Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Which curve(s) shift(s) and in which direction?

Refer to Figure 4-30. In this market for tablet computers, more suppliers enter the market and the price of laptops, a substitute good, increases, while all other factors remain constant. Explain the change(s) in the equilibrium price and quantity

Explanation / Answer

a)

When more suppliers enter the tablets market, then the supply curve of tablets shifts to the right.

When the price of laptops, a substitute good increases, people switch from using laptops to tablet computers. This leads to a rightward shift in the demand curve of the tablets.

b)

When more suppliers enter the tablets market, then the supply curve of tablets shifts to the right.

This rightward shift in the supply curve leads to a fall in price of tablets and an increase in its quantity sold.

When the price of laptops, a substitute good increases, people switch from using laptops to tablet computers. This leads to a rightward shift in the demand curve of the tablets, which leads to an increase in price of tablets as well as its quantity sold.

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