Question

The figure shows the supply and demand for online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. Move the supply and/or demand curves to reflect the primary effect this would have on the market for online music. You can assume that online music is a normal good. Also select the end result of equilibrium price and quantity.

Answer 1

Answer:

Monetary downturn would perpetually cause fall in total interest in economy. Thus, interest for online music will fall also. Request bend will move to left and equilibrium will be built up at lower point. Following is chart:  

Cost of houses Supply Old balance cost New Demand cost new equilibrium amount Old  

Equilibrium value: Falls  

Equilibrium Quantity: Falls.  

In above graph DD tumbles to leftwards and now request bend converges the SS or supply bend at lower point. Balance is accomplished at lower point where both cost just as amount fall.