Question

The price of compact fluorescent light bulbs fell because of improvements in production technology. As a result, the demand for incandescent light bulbs decreased. This caused the price of incandescent light bulbs to fall; as the price of incandescent light bulbs fell the demand for incandescent light bulbs decreased even further.
Evaluate this statement.

a. The statement is false. A decrease in the price of compact fluorescent light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.
b. The statement is false because compact fluorescent light bulbs producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits
c. The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluor. light bulbs fell.
d. The statement is false. a decrease in the price of compact fluor. light bulbs would decrease the demand for incandescent light bulbs, but a decrease in the price of incandescent light bulbs would not cause the demand for incandescent light bulbs to decrease.

Answer 1

Answer:

c. The statement is false because the demand for incandescent light bulbs would increase as the price of compact fluor. light bulbs fell.

Explanation:

If improvements in production technology reduce the price of incadescent light bulbs, the normal thing that would happen is that demand for this good would increase, because now people will be able to buy the good at a lower price.