Question

Suppose a union successfully negotiates an increase in the wages of workers producing computer chips. This would lead to (a decrease, an increase) in the supply of computers, causing the price of computers to (rise, fall) . Because computers and computer software are (substitutes, complements) , this change in price would cause the demand for computer software to (increase, decrease) . However, computers and typewriters are (substitutes, complements) , so the change in the price of computers would (decrease, increase) the demand for typewriters.

Answer 1

Decrease

rise

complements

decrease

substitutes

increase

Step-by-step explanation:

As a result of the increase in wages would lead to an increase in the cost of production and as a result a fall in supply. As a result of the fall in supply, the price of computers would rise.

Complement goods are goods that can be used together. computers and computer software are used together. As a result of the rise in price of the computers, which would lead to fall in demand for computers, there would be less demand for the software. So, the demand for software would fall.

Substitute goods are goods that can be used in place of another good. A rise in price of computers would lead to a rise in demand for typewriters.