Question

We know that DVD players have seen a significant fall in price over recent years. We also know that this fall in prices have been caused by significant decreases in the cost of producing DVD players. In terms of the supply and demand analysis this is explained by:a. A shift to the right of the demand curveb. A shift to the left of the supply curvec. A movement along the supply curve to the rightd. A shift to the right of the supply curvee. A movement along the supply curve to the left

Answer 1

Answer: Option (d) is correct.

Step-by-step explanation:

There is a fall in the price of DVD players because of the fall in the cost of production of DVD players. Changes in the cost of production is one of the determinant of supply. So, if there is any changes occur in the production cost will lead to shift the supply curve.

Suppose there is a fall in the cost of production of DVD players then as a result supply curve will shift rightwards because producing DVD become more profitable for the firms. This fall in the cost of production will also reduced the prices of DVD players.