Suppose that in 2011, 4 million plasma TVs were purchased at $950 each, while in 2012, 3 million plasma TVs were purchased at $800 each. What might have caused this change?

Question

Quizplus · Accepted Answer

The decrease in the number of plasma TV purchases and the decrease in price suggest that consumers may have switched to purchasing LCD TVs, which could have become a more attractive option due to a drop in price. This is consistent with the idea that LCD TVs are a substitute for plasma TVs. The increase in plasma TV manufacturing technology would not necessarily cause a decrease in price or a decrease in the number of purchases, and the decrease in technology would not necessarily cause a decrease in purchases but may cause an increase in price.

Suppose That in 2011, 4 Million Plasma TVs Were Purchased