Solution Found!
The cost of producing flat-screen TVs has fallen over the
Chapter , Problem 7(choose chapter or problem)
The cost of producing flat-screen TVs has fallen over the past decade. Lets consider some implications of this fact.a.Draw a supply-and-demand diagram to show the effect of falling production costs on the price and quantity of flat-screen TVs sold.b.In your diagram, show what happens to consumer surplus and producer surplus.c.Suppose the supply of flat-screen TVs is very elastic. Who benefits most from falling production costsconsumers or producers of these TVs
Questions & Answers
QUESTION:
The cost of producing flat-screen TVs has fallen over the past decade. Lets consider some implications of this fact.a.Draw a supply-and-demand diagram to show the effect of falling production costs on the price and quantity of flat-screen TVs sold.b.In your diagram, show what happens to consumer surplus and producer surplus.c.Suppose the supply of flat-screen TVs is very elastic. Who benefits most from falling production costsconsumers or producers of these TVs
ANSWER:Step 1 of 4
(a)
A fall in cost will lead to an increase in supply. An increase in supply will lead to a fall in price and a rise in the quantity of flat-screen TV’s sold.