Consider the market for cable-based Internet access service. How would the follo
ID: 1128606 • Letter: C
Question
Consider the market for cable-based Internet access service. How would the following events impact the demand curve or the quantity demanded for cable-based Internet access service?
Companies providing wireless Internet access services reduce their prices by 10%. (5 points)
Companies providing cable-based Internet access services reduce their prices by 5%. (5 points)
The income of consumers of cable-based Internet access services increases by 3%. (5 points)
The preferences from consumers shift away from using cable-based Internet access services in favor of wireless Internet access services.
Explanation / Answer
Cable based and wireless Internet access service are both substitutes so a reduction in the price of wireless based Internet access service will decrease the quantity demanded for cable based Internet access service because consumers get the same utility from both the products so consumers will shift their consumption to wireless based Internet access service.
When the prices of cable based Internet access service decrease people start consuming more of it meaning the demand curve will shift to its right and the quantity demanded for cable based Internet access service will increase
The income of consumers increases meaning their purchasing power increases so they will demand more quantity of the product. The quantity demanded for cable based Internet access service will increase.
The consumers prefrences will shift away from cable based Internet access service will decrease quantity demanded for the product and people will start consuming wireless Internet access service