Positive Technological Change in the Production of LCD Televisions Caused

question 46

Multiple Choice

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall.Holding everything else constant,how would this affect the market for Blu-ray players (a complement to LCD televisions) ?

• A) The supply of blu-ray players would increase and the equilibrium price of blu-ray players would decrease.
• B) The demand for blu-ray players would increase and the equilibrium price of blu-ray players would increase.
• C) The demand for blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and blu-ray players.
• D) The demand for blu-ray players would increase and the equilibrium price of blu-ray players would decrease.

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Definitions:

Maximizing Profits

The process of adjusting production and operations to achieve the highest possible profit margins under given market conditions.

Marginal Decision Rule

A principle stating that an action should be taken if, and only if, the marginal benefit exceeds the marginal cost.

Profit-Maximizing

The strategy or procedure for altering sales and production to attain the greatest possible earnings.

Market Price

The amount of money for which a good or service is offered, sold, or bought in the market.