Question

In the market for portable power​ banks, indicate whether the following events would cause an​ "increase or a decrease in demand​" or an​ "increase or a decrease in the quantity demanded.​"

a. There is an increase in the price of carry cases for portable power banks. _____
equilibrium quantity would ____, Equilibrium price would _______.

b. There is a decrease in the price of devices used to charge portable power banks.
Equilibrium quantity would ____
Equilibrium price would ______

c. There is an increase in the number of consumers of portable power banks.
Equilibrium quantity would ____
Equilibrium price would ______

d. A booming economy increases the income of the typical buyer of portable power banks ​(this is a normal good​).
Equilibrium quantity would ____
Equilibrium price would ______

e. Consumers of portable power banks anticipate that the price of this good will decline in the future.
Equilibrium quantity would ____
Equilibrium price would ______

Answer 1

Answer:

a. Decreases Demand, Equilibrium price & quantity will fall

b. Increases Demand, Equilibrium price & quantity will rise

c. Increases Demand, Equilibrium price & quantity will rise

d. Decreases Demand, Equilibrium price & quantity will fall

Explanation:

Change (Increase/Decrease) in Quantity Demanded : occurs due to change in the good's own price, other factors remaining constant.  

Change (Increase/Decrease) in Demand : occurs due to change in other factors of demand {income, substitute/ complements good price, taste}

1. All the below demand changes are due to factors other than price, so are change (increase / decrease) in demand
2. Increase in Demand creates excess demand & competition among buyers increases prices, new equilibrium quantity. Decrease in demand creates excess supply & competition among sellers reduce price, new equilibrium quantity is less.

• Carry cases for portable banks & devices used to charge portable power banks are complementary (jointly used goods with) portable power banks. Price & demand of complements are inversely related. So :-

a. Increase in carry cases price -  Decreases Demand, Equilibrium price & quantity will fall

b. Decrease in charge devices - Increases Demand, Equilibrium price & quantity will rise

• Income & no of consumers of a product are directly related to demand. So:-

c. No. of Consumers increase - Increases Demand, Equilibrium price & quantity will rise

d. Income increase - Increases Demand, Equilibrium price & quantity will rise.

• Future price expectations (rise/fall) are directly related to present demand.

e. Price fall anticipated:  Decreases Demand, Equilibrium price & quantity will fall