226k views
1 vote
You and your friends expect that the ability to download songs from the internet for free will end in 3 months, and then downloads will be for purchase only. Show what happens in the market tomorrow! What changes: D or Qd?

a) Demand (D) increases
b) Demand (D) decreases
c) Quantity demanded (Qd) increases
d) Quantity demanded (Qd) decreases

User Rich Ehmer
by
7.5k points

1 Answer

2 votes

In anticipation of free song downloads ending in 3 months, quantity demanded is likely to increase as consumers download more songs now before having to pay for them later.

If you and your friends expect that the ability to download songs from the internet for free will end in 3 months and that afterward, downloads will be available for purchase only, it's reasonable to anticipate that quantity demanded (Qd) will increase tomorrow. This scenario doesn't necessarily change demand itself; instead, it changes the number of units consumers are willing to purchase at the currently free price. In economic terms, an increase in quantity demanded refers to a movement along the demand curve due to change in the price of the good, which, in this case, is going from free to paid in the future. Therefore, consumers might want to download as many songs as possible while it is still free, leading to a temporary surge in quantity demanded before the new pricing policy takes effect.

User Sangram Parmar
by
7.9k points