Between 1994 and 2004, the Monthly Charge for Cellular Phone

question 142

Multiple Choice

Between 1994 and 2004, the monthly charge for cellular phone service decreased from $120 per month to $30 per month. At the same time, the number of subscribers increased from less than 10 million to more than 75 million. Which of the following provides the best explanation for these changes?

• A) an increase in consumer income between 1994 and 2004
• B) a reduction in the price of residential phone service, a substitute for cellular phone service
• C) an increase in the wages of workers in the cellular phone industry
• D) technological improvements that reduced the cost of supplying cellular phone service

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Definitions:

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Total Variable Costs

The sum of expenses that vary directly with the level of production or output, including costs for materials and labor.

Output

The amount of goods or services produced by a business, industry, or economy.

Supply Curve

A graphical representation showing the relationship between the price of a good and the amount of it that producers are willing to supply at each price level.