For each of the following events described, indicate the effects to the demand and to the supply. Use the demand and supply graphs provided below to match these events. Then determine what happens to the market equilibrium price and equilibrium quantity. Scenario: As more and more people bought home computers during the 1990s, the demand for access to the World Wide Web and the Internet increased sharply. At same time, new companies like Earl's began to enter the internet-access market competing with older, more established services such as American Online. Despite a massive increase in demand, the price of access to the Web actually declined.
For each of the following events described, indicate the effects to the demand and to the supply. Use the demand and supply graphs provided below to match these events. Then determine what happens to the market equilibrium price and equilibrium quantity. Scenario: As more and more people bought home computers during the 1990s, the demand for access to the World Wide Web and the Internet increased sharply. At same time, new companies like Earl's began to enter the internet-access market competing with older, more established services such as American Online. Despite a massive increase in demand, the price of access to the Web actually declined.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:For each of the following events described, indicate the effects to the demand and to the supply. Use the
demand and supply graphs provided below to match these events. Then determine what happens to the
market equilibrium price and equilibrium quantity.
Scenario: As more and more people bought home computers during the
1990s, the demand for access to the World Wide Web and the Internet
increased sharply. At same time, new companies like Earl's began to enter the
internet-access market competing with older, more established services such
as American Online. Despite a massive increase in demand, the price of
access to the Web actually declined.
Change in Demand*
Increase
Decrease
Did not Change
Indeterminate
Change in Supply *
Increase
Decrease
Did not Change
Indeterminate
Graph *
Do
Do
A
B
A
P
So
So
Do
Do
So
So
S:
Do
E
F
E
So
So
Di
Do
Do
G
O G
Он
So
S1
So
Do
Do
Q
So
Do
D1
-Q
K
O K
Change in market equilibrium price. *
Increase
O Decrease
Did not Change
O Indeterminate
Change in market equilibrium quantity. *
O Increase
O Decrease
Did not Change
O Indeterminate
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