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Suppose in the market for iPhones, the following two changes take place: (1) the cost of making iPhones falls, and (2) customers begin to prefer Android-platform smartphones over iPhones. What happens to equilibrium price and equilibrium quantity

User Pavelsaman
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1 Answer

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Incomplete question.

Options:

A) The equilibrium price is indeterminate, but the equilibrium quantity falls.

B) The equilibrium price and the equilibrium quantity fall.

C) The equilibrium price falls, but the equilibrium quantity is indeterminate.

Answer:

C) The equilibrium price falls, but the equilibrium quantity is indeterminate.

Step-by-step explanation:

Remember, the Equilibrium quantity refers to an equal level of supply and demand for a product.

But in such a case lie this, where the cost of making iPhones falls, meaning lower unit cost; selling cost, and customers begin to prefer Android-platform smartphones over iPhones, meaning there's falling demand, then it would result in the equilibrium price falling, but the equilibrium quantity would be indeterminate as it depends on the size of the changes in demand and supply.

User Woodsman
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