Question

1. What is the effect of price and quantity in the market for smartphones when the price of a smart phone wireless plan increases?
2. What are substitute goods for orange juice? If the supply of orange juice fell, what would happen in the market for orange juice and in the market for one of the substitute goods you found?  Explain and draw graphically.

Answer 1

Smartphone and smartphone wireless plan are complementary goods,they are consumed together.A rise in price of smartphone plans would make using smartphones expensive.Thus,the demand for smartphones would fall.Fall in demand reduces price and quantity..

Substitute goods for orange juice are mango juice, pineapple juice and other flavors of juices.A fall in supply of orange juice raises the price of orange juice.The demand for orange juice falls.The substitutes would appear relatively cheap.The demand for substitute juices will rise raising price and quantity.