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How would each of the following events affect the demand for new textbooks? I. The price...

How would each of the following events affect the demand for new textbooks? I. The price of a used textbook rises. II. The price of college tuition rises. III. More high school graduates decide to attend college.

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Answer #1

1. Used textbooks and new textbooks are substitutes to each other. With an increase in price of used textbooks, the demand for used textbooks reduces and the demand for new textbooks increases.

2. As the price of college tution rises, less of new textbooks will be demanded as many students will not enroll for college studies. Collge service and new textbooks are complementary to each other. If collge fee increases, less students take admission and hence, less of new textbook is demanded.

3. When more students decide to attend collge, demand for college admissions as well as new textbooks rises. Demand for textbooks increases.

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