Question

Assume it is August of 2008. After much deliberation, TV (television) stations nationwide choose to stop broadcasting their programs in analog starting in June of 2009 and instead broadcast in pure digital television. Hence, there is less than one year left of analog broadcasting. This decision affects companies that produce TVs, but also affects people that own and wish to purchase TVs. Please shift the supply and demand curves appropriately as a result of this news in consideration of the long run (in this case, for example, the year 2010) for analog TV sets.

Answer 1

Step-by-step explanation:

The analog TV sets demand will be affected because consumers will no longer buy analog TV sets because of the new decision. If there are no consumers to buy this good the demand curve will shift to the left.

The analog TV sets producers will know that consumers are not longer interested in this good and they will reduce the quantities they produce because if they remain with the same production quantities it is possible that no one buys a portion of them.

Also, it is possible that the people that owns an analog TV set will sell them because they know that in the future TV stations will stop broadcasting their programs in analog. If we sum both effects, the total supply will be reduced but not in the same proportion, the shift magnitude will be less but still the supply will shift to the left.