Consider the market for new DVDs.If DVD players became cheaper,buyers expected DVD prices to fall next year,used DVDs became more expensive,and DVD production technology improved,then we could safely conclude that the equilibrium price of a new DVD would

Question

Quizplus · Accepted Answer

The equilibrium price is affected by multiple factors: cheaper DVD players increase demand, expected future price drops decrease current demand, more expensive used DVDs increase demand, and improved technology increases supply. These conflicting effects make it uncertain what the net impact on price will be.

Consider the Market for New DVDs