Letīs Do Some Economics
Example 1 - the market for DVD players
Copy out Figure 1 below and label it as the market for DVD players.
Start at equilibrium
Now work through the following
changes, and adjust the diagram as you go. After you have had a go at
each change, follow the answer link below and see if you made the right
changes. Treat each change as a separate change - in other words start
with Figure 1 each time. Identify Supplyu or demand changes
Change 1. The development of a new microchip enables producers to reduce the price of their products.
Change 2. A major and successful advertising campaign is mounted for DVD's.
Change 3. The government applies VAT (sales tax) to all home entertainment equipment.