Pearson eText Economics -- Instant Access (Pearson+)
Pearson eText Economics -- Instant Access (Pearson+)
13th Edition
ISBN: 9780136879459
Author: Michael Parkin
Publisher: PEARSON+
Question
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Chapter 1, Problem 1SPA

(a)

To determine

The changes in incentives.

(a)

Expert Solution
Check Mark

Explanation of Solution

Apple’s decision about the iTunes increases the customer’s incentive to buy an iPad because the free availability of iTunes with unlimited quantity encourages people to buy the product.

Economics Concept Introduction

Economic incentives: Economic incentive refers to the additional benefit provided in order to achieve the desired economic activity and it also motivates an individual to perform an economical action.

(b)

To determine

Apple’s decision is a microeconomic or a macroeconomic issue.

(b)

Expert Solution
Check Mark

Explanation of Solution

Apple’s decision about the iTunes is a microeconomic decision. The reason is that the decision only affects one company and its market does not affect all the economy.

Economics Concept Introduction

Micro Economics: Microeconomics focuses on several issues such as consumer behavior, producer behavior, market segments, wage determination, and supply and demand of individual. It deals with the smaller units such as individuals, firms, households, and markets.

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