What will happen to the equilibrium price and quantity of landline phone services if new technologies lower the costs of providing such services and,at the same time,alternatives such as the Internet or mobile phones become more popular?

Question

Quizplus · Accepted Answer

The decrease in costs of providing landline phone services will lead to an increase in supply, which will cause a shift in the supply curve to the right. At the same time, the rise in popularity of alternatives such as the internet or mobile phones will decrease the demand for landline phone services. This will cause a shift in the demand curve to the left. The equilibrium price will fall due to the increase in supply and decrease in demand, while the effect on the equilibrium quantity of landline phone services is ambiguous as both the supply and demand are shifting.

What Will Happen to the Equilibrium Price and Quantity of Landline