More and more devices are being introduced in the market that perform tasks similar to that of PCs, such as tablets and smartphones.At the same time, the price of computer chips to make high-end PCs continues to fall.What is the effect of the events on equilibrium price and quantity of high-end PCs?
A)price falls continuously as does quantity sold
B)price rises then falls while quantity sold falls continuously
C)price falls continuously while quantity falls initially but then rises, recouping earlier losses
D)price falls continuously and quantity rises continuously

Question

Quizplus · Accepted Answer

The introduction of tablets and smartphones has increased competition for high-end PCs, leading to a decrease in demand. At the same time, the falling price of computer chips has reduced the cost of production for high-end PCs. The combination of these two factors has led to a decrease in the equilibrium price and an initial decrease in the quantity sold. However, as the price of high-end PCs continues to fall, the quantity sold will eventually start to rise, recouping earlier losses.

More and More Devices Are Being Introduced in the Market