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Effects on Demand in a Competitive Market

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What effect should each of the following have upon the demand for profitable music players in a competitive market?

A) the development of improved, low priced devices that compete with music players
B) an increase in population and incomes
C) a substantial increase in the number and quality of music for players
D) consumer expectations of substantial price increases in music players

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Solution Summary

This solution explains how each of the points given would affect the demand for profitable music players in a competitive market.

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A) The development of improved, low priced devices that compete with music players will decrease the demand for profitable music players. The low priced devices are a substitute good. Because it is a substitute good and the demand for profitable music players in a competitive market is elastic, it will ...

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