Answer to Question #307145 in Macroeconomics for nickey

Question

With aid of diagram describe how each of the following will affect the demand for personal computers: (a) a rise in incomes (assuming computers are a normal good); (b) a lower expected price for computers; (c) cheaper software; (d) computers become simpler to operate.

Answer 1

[a] When there is an increase in the income, the demand for the personal computers will rise. From the graph above, the quantity demanded will increase and the equilibrium will shift to the right.

r[c] When the software becomes cheaper to purchase, the quantity demanded of the computers will reduce hence pushing the demand for the computers low. In this case, the equilibrium will shift to the left.

[d] When computers becomes simpler to operate, the demand increases because more skilled people will tend to purchase more as a result of ease of use and manipulation.