Reference: Ref 4-8 (Figure: Demand, Supply Shifts) In the figure, the initial demand curve is D1 and the initial supply curve is S1. If this depicts the equilibrium in the market for computer printers, what will happen when the price of computers increases?

Question

Quizplus · Accepted Answer

If the price of computers increases, there will likely be a decrease in demand for computer printers, as consumers may choose to allocate more of their budget towards the more expensive computers. This will cause the demand curve to shift left from D1 to D2. As a result, there will be less demand at the previous equilibrium price, leading to a decrease in price and a decrease in quantity supplied. Therefore, the new equilibrium will occur at a lower price and quantity, represented by the intersection of D2 and S1.

Reference: Ref 4-8 (Figure: Demand, Supply Shifts) in the Figure