Suppose in the Market for IPhones,the Following Two Changes Take

question 9

Multiple Choice

Suppose in the market for iPhones,the following two changes take place: (1) the cost of making iPhones rises and (2) customers begin to prefer Android-platform smart phones over iPhones.What happens to equilibrium price and equilibrium quantity?

• A) Equilibrium price and equilibrium quantity fall.
• B) Equilibrium price falls but equilibrium quantity is indeterminate.
• C) Equilibrium price is indeterminate and equilibrium quantity falls.
• D) Equilibrium price rises but equilibrium quantity is indeterminate.

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Definitions:

Maximum Price

A price ceiling set by the government or a regulatory body, above which a product or service cannot be sold in the market.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity.

Government

Government is the system or group of people governing an organized community, often a state.

Price Ceiling

A government-imposed limit on the price charged for a product, intended to prevent the price from rising to a certain level.