Asked by Kaila Martinez on Jun 15, 2024
Verified
Over the last few years,demand for DVDs has increased,but their equilibrium price has fallen.Which of the following,if true,best explains this situation?
A) The quantity supplied of DVDs has decreased during this period.
B) There has been a shortage of DVDs during this period.
C) The supply of DVDs decreased more than the increase in demand for DVDs.
D) The demand for DVDs has increased more than the decrease in supply of DVDs.
E) The supply of DVDs increased more than the increase in demand for DVDs.
Supply of DVDs
This refers to the total number of DVDs available for sale, influenced by manufacturing output, demand, and distribution capabilities.
Equilibrium Price
The price at which the quantity of a good or service demanded equals its supply in the market, leading to economic balance.
Demand for DVDs
The desire of consumers to purchase digital versatile discs (DVDs), which is influenced by factors such as price, income levels, and the availability of alternative media.
- Acquire knowledge on the notion of market balance and how modifications in supply and demand adjust the equilibrium cost and amount.
- Understand the impact of complementary and substitute products on market behavior.
- Assess market dynamics to identify how variations in supply and demand influence the directional alteration of equilibrium price and quantity.
Verified Answer
HG
H??ng GiangJun 20, 2024
Final Answer :
E
Explanation :
An increase in the supply of DVDs more than the increase in demand explains why the equilibrium price has fallen despite an increase in demand. This is because a greater supply, when not matched by an equal increase in demand, leads to lower prices to clear the excess supply.
Learning Objectives
- Acquire knowledge on the notion of market balance and how modifications in supply and demand adjust the equilibrium cost and amount.
- Understand the impact of complementary and substitute products on market behavior.
- Assess market dynamics to identify how variations in supply and demand influence the directional alteration of equilibrium price and quantity.