"The Price of Digital Cameras Fell Because of Improvements in Production

question 168

Multiple Choice

"The price of digital cameras fell because of improvements in production technology.As a result,the demand for non-digital cameras decreased.This caused the price of non-digital cameras to fall; as the price of non-digital cameras fell the demand for non-digital cameras decreased even further." Evaluate this statement.

• A)The statement is false because the demand for non-digital cameras would increase as the price of digital cameras fell.
• B)The statement is false.A decrease in the price of digital cameras would decrease the demand for non-digital cameras,but a decrease in the price of non-digital cameras would not cause the demand for non-digital cameras to decrease.
• C)The statement is false because it confuses the law of demand with the law of supply.
• D)The statement is false because digital camera producers would not reduce their prices as a result of improvements in technology; doing so would reduce their profits.

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