The cost of sensors used in making radio frequency identification (RFID) chips falls, while a successful ad campaign makes using "tap" technology in credit card usage more fashionable. As a result, the equilibrium price of RFID chips _____, and the equilibrium quantity _____.

Question

Quizplus · Accepted Answer

The cost of sensors falling leads to a decrease in production costs, potentially lowering prices, while increased demand from a successful ad campaign could raise prices, making the price change uncertain. However, both factors lead to an increase in the equilibrium quantity of RFID chips.

The Cost of Sensors Used in Making Radio Frequency Identification