Suppose in the market for iPhones, the following two changes take place: (1) the cost of making iPhones rises, and (2) customers begin to prefer Android-platform smartphones over iPhones. What happens to equilibrium price and equilibrium quantity?

Question

Quizplus · Accepted Answer

When the cost of making iPhones rises, the supply curve shifts to the left, leading to a higher equilibrium price and a lower equilibrium quantity. However, when customers begin to prefer Android-platform smartphones over iPhones, the demand for iPhones decreases, shifting the demand curve to the left. This leads to a lower equilibrium price but also a lower equilibrium quantity. The combined effect on the equilibrium price is indeterminate because one factor pushes the price up while the other pushes it down. However, both effects lead to a lower equilibrium quantity.

Suppose in the Market for IPhones, the Following Two Changes