The price of a new textbook increases from $200 to $270, while the price of used copies of the textbook increased from $100 to $125. Other things being equal, we would expect
A) the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease.
B) the quantity demanded of both to fall.
C) the demand for the new textbook to increase and the demand for the used textbook to decrease.
D) the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase.

Question

Quizplus · Accepted Answer

An increase in price usually results in a decrease in quantity demanded. As the price of the new textbook increased, consumers may opt to purchase the used textbook instead, leading to an increase in its quantity demanded. On the other hand, the increase in price of the used textbook may deter some consumers from buying it, leading to a decrease in its quantity demanded. Therefore, we would expect the quantity demanded of the used textbook to increase and the quantity demanded of the new textbook to decrease.

The Price of a New Textbook Increases from $200 to $270