Suppose that the market for computers is initially in equilibrium. Further suppose that there is an increase in the price of computer software. The equilibrium price will rise; the equilibrium quantity will rise.

Question

Quizplus · Accepted Answer

An increase in the price of computer software, a complement to computers, would likely decrease the demand for computers as the overall cost of owning and operating a computer increases. This would lead to a decrease in the equilibrium quantity of computers sold. The effect on the equilibrium price could vary depending on the shifts in supply and demand curves, but the initial statement that both price and quantity will rise is incorrect in this context.

Suppose That the Market for Computers Is Initially in Equilibrium