Smart phones are normal goods. What will happen to the equilibrium price and quantity of smart phones if phone plans become cheaper, more firms start producing smart phones, and
Smart phone users experience an increase in income?

Question

Quizplus · Accepted Answer

Cheaper phone plans and increased income will increase demand, while more firms producing smartphones will increase supply. The increase in both demand and supply will definitely increase quantity, but the effect on price is ambiguous as it depends on the relative shifts in demand and supply.

Smart Phones Are Normal Goods