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Price and Quantity - DVD Players

What do you think will happen to the price and quantity of DVD players if

a. The availability of good movies to play on DVD players increases?
b. Personal income increases?
c. The price of inputs used to produce DVD players decreases?
d. Ticket prices at local movie theaters decline substantially?

Solution Preview

You can draw a supply and demand curve for this. Draw and x in a quarter of a box on a page. demand is the line that goes from the bottom left to the top right and the other one is the supply curve. Price is a line that goes from the left to the right horizontally wherever the two lines intercept.

a. The demand line would go up moving the price line up as well (where the supply and demand lines meet) since now we have more movies and the demand for dvd players increases. Therefore price increases.

b. Increase in personal income will give consumers more excess income to spend ...

Solution Summary

This solution goes over 4 different changes to the DVD player industry, explaining the consequences of each on price and quantity.