Question

Suppose that Xbox X and PS5 are substituted in demand. An increase in the supply of...

Suppose that Xbox X and PS5 are substituted in demand. An increase in the supply of Xbox X will raise the price of PS5. (5 points)

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Substitute goods are those goods that can be used in the place of another. If the price of one good increases, then demand for its substitute good is likely to rise. Therefore, substitute goods have a positive cross price elasticity of demand.

If Xbox and PS5 are substitute goods and there is an increase in supply of Xbox, then the supply curve of Xbox will shift rightward and the price of Xbox will fall. If there is no change in price of PS5 and price of Xbox falls due to increase in demand, it becomes comparitively cheaper than PS5 and thus the equilibrium quantity of Xbox increases.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Suppose that the demand and supply functions for good X are: Qd = 298 - 8P...
Suppose that the demand and supply functions for good X are: Qd = 298 - 8P and Qs = - 32 + 4p A. Find the equilibrium price and quantity. B. Sketch this market. [HINT: Be sure to draw the two curves carefully, using inverse demand and supply functions to calculate the quantity- and price-axes intercept points.] C. Use the demand function to calculate consumer surplus. D. Use the supply function to calculate producer surplus. E. What is the total...
Table: An Increase in Supply A Decrease in Supply An Increase in Demand A B A...
Table: An Increase in Supply A Decrease in Supply An Increase in Demand A B A Decrease in Demand C D Refer to the Table above: Which combination would produce an increase in equilibrium price and an indeterminate change in equilibrium quantity? Note: Start with a demand and supply curves and identify the initial equilibrium price and quantity. Then, change the demand and supply curves (indicated in the table) proportionally and identify the new equilibrium price and quantity. In some...
Suppose there is an increase in both supply and demand for personal computers. In the market...
Suppose there is an increase in both supply and demand for personal computers. In the market for personal computers, we would expect the a. the change in the equilibrium quantity to be ambiguous and the equilibrium price to rise b. equilibrium quantity to rise and the equilibrium price to fall. c. equilibrium quantity to rise and the equilibrium price to rise d. equilibrium quantity to rise and the change in the equilibrium price to be ambiguous
What are the factors that causes an increase (rightward or upward shift) in demand and supply...
What are the factors that causes an increase (rightward or upward shift) in demand and supply of Chocolate Bars and High End Luxury cars (Write down at least 5 points each for demand and supply?
1. Suppose the demand for village defense in Temeria is Qd=300-2P, and the supply is Qs=4P....
1. Suppose the demand for village defense in Temeria is Qd=300-2P, and the supply is Qs=4P. a. Graph the supply and demand curves. (3 points) b. Solve for the equilibrium price and quantity. Show this point on your graph from part (a). (5 points) c. How much consumer surplus is created in this market? How much producer surplus? (4 points) d. Suppose the King of Temeria puts a tax of 10 orens per unit on village defense. Write an equation...
Suppose that the market demand and supply for milk is given by Qd =120−6P and Qs...
Suppose that the market demand and supply for milk is given by Qd =120−6P and Qs = 12P − 60 a. Find the market equilibrium quantity, and the equilibrium price. (5 points) b. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price floor of $11 is imposed in this market. (5 points) c. Determine the quantity demanded, the quantity supplied, and the magnitude of the surplus (or shortage) if a price...
Suppose the demand for cigarettes is Q = 15 – 0.5P and the supply of cigarettes...
Suppose the demand for cigarettes is Q = 15 – 0.5P and the supply of cigarettes is Q = P – 3, where P is the price per pack of cigarettes. What are the initial equilibrium levels of Q and P? What are the elasticities of demand and supply at the equilibrium? Given the elasticity of demand at the equilibrium, if supply were to increase would total revenue in the market increase or decrease? Explain.
Supply and Demand 1. Explain the difference between an “increase in demand” and an “increase in...
Supply and Demand 1. Explain the difference between an “increase in demand” and an “increase in quantity demanded” (including a discussion of what could cause them to happen). 2. Explain how a free market automatically eliminates a market shortage in the short-run (the price mechanism).
An increase in demand for oil and an increase in supply of oil will: Select one:...
An increase in demand for oil and an increase in supply of oil will: Select one: a. increase price and decrease quantity. b. decrease price and increase quantity. c. increase price, but whether it increases quantity depends on how much each curve shifts. d. increase quantity, but whether it increases price depends on how much each curve shifts.
According to the law of demand an increase in the price of Pepsi will (ceteris paribus):...
According to the law of demand an increase in the price of Pepsi will (ceteris paribus): A)        increase the quantity demanded of Pepsi. B)        decrease the quantity demanded of Pepsi. C)        increase the demand for Pepsi. D)        decrease the demand for Pepsi. 3 points    QUESTION 7 A change in the demand for beef will most likely be caused by a change in the: A)        price of beef. B)        price of pork. C)        cost of producing beef D)        technology used...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT