Final answer:
A reduction in tariffs on imports of iPods would likely lead to a decrease in both the equilibrium price and quantity of Sony Walkman-type products, as consumers would prefer the now cheaper iPods.
Step-by-step explanation:
The question asks how a reduction in tariffs on imports of iPods would impact the equilibrium price and quantity of Sony Walkman-type products. To understand this, we use the four-step process of economic analysis. First, we identify the market we are analyzing, which in this case is the market for portable music players. Second, we determine what kind of shift will occur; a tariff reduction on iPods makes them cheaper and thus more attractive to consumers, leading to increased demand for iPods. Third, we analyze how the change affects supply and demand curves; increased demand for iPods would shift their demand curve to the right. Fourth, we observe the resulting changes in equilibrium; since Sony Walkman-type products are substitutes for iPods, the increased demand for iPods would likely result in a decrease in demand for Walkmans.
As a result, the equilibrium price for Walkmans would probably decrease, and the equilibrium quantity would also decrease. Therefore, the answer to the student's question is (b) Decrease equilibrium price and quantity.