Economic Demand and Supply

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Question 1
a)

S2
S2
S1
S1

Q1 Q2
(unit)
Q1 Q2
(unit)

In this case a computer chip needed to produce a computer, as both are complementary goods. in which , complementary is goods that can complement the function of the other goods. To produce more computers to be able to offer to the public, computer chips have to be increased. This happens because they are complements that if prices rise, the computer chip would automatically affect the price of the computer. Assuming that the company enter the number of computers (Qo) at a price (Po), and the equilibrium price at Eo. In this condition, when the prices of chip prices fell, cateris paribus, computer production costs will go down. This causes the supply curve shifts to the right, from S1 to S2.Then the surplus will appear (EOX), where the imbalance is causing the movement led down to a new equilibrium (E0 to E1) where the quantity demanded of computers increased from Q0 to Q1 then computer prices will decrease from Po to P1, where the surpus is eliminated and increase the number of requests is characterized by the demand curve moves downward.

b)

y
y

Computer chips and software are complements. According to the law of demand, complementary goods will follow what happens to the furnishing goods. where Eo describes the equilibrium of supply is marked with "S" and the demand for computer software marked with "Do" when the price Po and the quantity Qo. Computer chip prices fall down, cateris paribus, cause software demand has increased so that the curve shifts to right from Do to D1, which then creates a shortage (EOy).The quantity supplied for computer software will increase from Qo to Q1 and so does the price of computer software has increased from Po to P1 until the shortage is gone and create new equilibrium increase in E1.

c)
y
y

D1

D1

D2
D2

Computer chips with typewriters have a substitution relationship can replace the function of his other...
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