Answer to Question #57857 in Macroeconomics for tom

Question

Use three-step method to analyze how the following events influence the equilibrium price and quantity of HDTV.Technological progress increases the efficiency of mass producing HDTV-capable television sets. At the same time, more cable and television networks begin broadcasting in HDTV format, increasing the appeal of HDTV-capable television sets. On the basis of this information, what can be said about conditions in the HDTV market?

Answer 1

If technological progress increases the efficiency of mass producing HDTV-capable television sets, then, according to decrease in production costs, the supply of HDTV-capable television sets will increase and shift to the right, which will cause the increase in equilibrium quantity and decrease in equilibrium price. At the same time, if more cable and television networks begin broadcasting in HDTV format, increasing the appeal of HDTV-capable television sets, then the demand for HDTV-capable television sets will increase and shift to the right too, causing the increase in equilibrium quantity and increase in equilibrium price. This two events will cause the increase in equilibrium quantity of HDTV-capable television sets, but the change in equilibrium price can't be determined exactly.