/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Problem 18 A Dell computer is a substitute ... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 3: Problem 18

A Dell computer is a substitute for an HP" computer. What happens to the demand for HP computers and the quantity demanded of Dell computers as the price of a Dell falls (as a result of a change in supply)?

Short Answer

Expert verified
As the price of Dell computers decreases, the quantity demanded of Dell computers increases while the demand for HP computers decreases.

Step by step solution

01

Understand the concept of 'substitute goods'

If two goods are substitutes, it means that they can be used in place of one another. Here, Dell and HP computers serve the same function and thus, are substitutes.
02

Initial impact of decrease in price of a substitute good

As the price of Dell computers decreases, they become more attractive to consumers. This causes a movement along the demand curve of Dell computers to a higher quantity demanded.
03

Impact on the demand for other good

As more consumers opt for cheaper Dell computers, the demand for the more expensive alternative, HP computers, will decrease. This causes a shift in the entire demand curve of HP computers to the left, indicating a decrease in demand at every price.
04

Resulting changes

The decrease in the price of Dell computers leads to an increase in their quantity demanded and a decrease in demand for HP computers.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

When speeding tickets were $$\$ 100$$, usually 500 speeders were on the roads each month in a given city; when ticket prices were raised to \(\$ 250\), usually 215 speeders were on the roads in the city each month. Can you find any economics in this observation?

Identify what happens to equilibrium price and quantity in each of the following cases: a. Demand rises and supply is constant. b. Demand falls and supply is constant. c. Supply rises and demand is constant. d. Supply falls and demand is constant. e. Demand rises by the same amount that supply falls. f. Demand falls by the same amount that supply rises. g. Demand falls less than supply rises. h. Demand rises more than supply rises. i. Demand rises less than supply rises. j. Demand falls more than supply falls. k. Demand falls less than supply falls.

Some goods are bought largely because they have "snob appeal." For example, the residents of Beverly Hills gain prestige by buying expensive items. In fact, they won't buy some items unless they are expensive. The law of demand, which holds that people buy more at lower prices than higher prices, obviously doesn't hold for the residents of Beverly Hills. The following rules apply in Beverly Hills: high prices, buy; low prices, don't buy. Discuss.

How might the price of corn affect the supply of wheat?

Explain how the market moves to equilibrium in terms of shortages and surpluses and in terms of maximum buying prices and minimum selling prices.
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.