Evaluate how the following situations will affect the demand curve for iPods. (a

Question

Evaluate how the following situations will affect the demand curve for iPods.

(a) Income statistics show that income of 18–25-year-olds have increased by 10 percent over the last year.

(b) Efforts of music artists wanting greater protection of their music result in more stringent enforcement of copyrights and the shutdown of numerous illegal downloading sites.

(c) Believing that it has significant control of the market for portable digital music players, Apple decides to raise the price of iPods with the goal of increasing profits.

(d) The price of milk decreases.

Explanation / Answer

a) the change in population (who are likely to buy ipods) has increased, so the demand curve will move out (to the right) b) music being complementary with ipods, since the price of the music increases, the demand curve will move down (to the left) c) the increase in the price of ipods would not affect the demand curve itself, but would decrease the quantity demanded. d) milk isn't a substitute for or complementary to ipods, so it is unlikely that the demand curve will be impacted at all

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