Answer to Question #135323 in Macroeconomics for Jasmine Acosta

Question

(c) Assume gadgets now become more popular. On your graph in part (a), show the effect of the increase in gadgets' popularity on the equilibrium price and quantity of gadgets.

Answer 1

If gadgets become more popular, it means that consumer places a higher value on the gadgets and producers have a higher price in order to supply the gadgets. so, the price will increase. If both the demand and supply increase, the equilibrium will increase.