Consider the market for iPads.What happens if a fantastic new alternative tablet is developed by Samsung and,at the same time,a boat carrying a large shipment of iPads is attacked by pirates and sunk?

Question

Quizplus · Accepted Answer

The development of a fantastic new alternative tablet by Samsung would increase competition in the market for tablets, leading to a decrease in demand for iPads and a decrease in their price. However, the attack on the shipment of iPads would decrease the supply of iPads, leading to an increase in their price. The net effect on price is indeterminate since the two forces are working in opposite directions. The quantity of iPads would decrease due to the reduction in supply caused by the pirate attack.

Consider the Market for IPads