Question

If (1) the cost of manufacturing computers decreases and (2) at the same time the quality improves, making computers more useful for households, which of the following is most likely to happen?a. equilibrium price will increase, equilibrium quantity will increaseb. equilibrium price may increase or decrease; equilibrium quantity will increasec. equilibrium price will decrease; equilibrium quantity will decreased. equilibrium price may increase or decrease; equilibrium quantity will decrease

Answer 1

Answer:

equilibrium price may increase or decrease; equilibrium quantity will increase

Explanation:

Two things are happening here

1. The cost of manufacturing computers decreases,  which generates Supply to shift Right

2. Quality improves, making computers more useful for households,  which generates Demand to shift Right.

This is illustrated by the figure attached. Quantity unequivocally will increase, price on the other hand will increase or decrease depending on how much each curve shifts. For example on the left, price increases, and on the right decreases