Answer to Question #39201 in Microeconomics for VISNURUPAN A/L K.BASKARAN

Question

1. Nowadays there are many types of notebook that can be found in the market. whether it is for personal or business usage there are plenty of choices by looking at the design, price and specs that are provided to them. An increase in the demand for notebooks raises the quantity of notebooks demanded, but not the quantity supplied. Elaborate with detail and provide some examples to support your statement.

2. Starbucks, Chatime, The coffee Bean & Tea Leaf and Dunkin Donuts are some of the shops that are selling coffee and tea to their customers by the name of McCafe. Even fast food companies such as McDonald now sell coffee to their customers by the name of McCafe. The product is considered as a substitute good where if the price of coffee is increased people will go for tea and vice versa. Explain the substitute effect and the choice that a consumer makes under this effect.