Positive Technological Change in the Production of LCD Televisions Caused

question 38

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:

Fixed Costs

Expenses that do not change in total regardless of changes in the volume of goods or services produced or sold.

Operating Income

The profit realized from a business's ongoing operations, calculated before taxes and interest payments are deducted.

Variable Cost

Costs that fluctuate in direct proportion to changes in production volume or activity levels.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales.