Question

Imagine you are a subscriber on Facebook. If Facebook begins to charge a fee would you still utilize this social networking tool? Would the supply and demand curves change with and without the fee? Is there a shift or movement involved? Explain your answer utilizing your knowledge from Chapter 3.

- 100 word response

Answer 1

If Facebook begins to charge a fee I will decrease the use of this social networking tool.

Because after charging a fee it will be a luxury product for use. Some people use Facebook for entertainment purpose. They will reduce their use. Some people use it as a platform for advertisement, they may or may not decrease the use of it. There will be a movement along the demand curve to the left as demand decreases. As the demand is affected by the price so there is a movement. Supply will be the same as before. This fee will not affect the supply curve.

movement is from a to b where equilibrium price is increased and demand decreases