Question

Consider the market for tablet (like iPads and Android tablets). Suppose the average price of an iPad goes up by $20 when a major online retailer changes its sale policies. Which of the following will occur?
The supply curve for iPads will shift.
The demand curve for iPads will shift.
The supply curve for Android tablets will shift
The price of Android tablets will increase.
The demand for Android tablets will increase

Answer 1

Answer:

The price of Android tablets will increase.

The demand for Android tablets will increase.

Explanation:

iPads and android Tablets are direct competition for one another.

So, when the average prices of an ipad goes up ,  some percentage of the consumers will seek alternatives for similar product. This is why the demand for android tablets will increase.

But, there is one more point to consider.

Online retailer tend to sell different brands of a similar product to its consumers.  It is very likely that big retailers will sell both apple and andorid products in their store.

if the price of Ipad goes up because of the change in the retailer's sale policies, that change will definitely affect the price of the android as well

Because of this, The price of Android tablets will also increase.  Even though the increase may not be as high as Ipad since they have lower baseline price/