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(Solved) Microsoft Word - EC112Takehome.


Microsoft Word - EC112Takehome.Quiz.03.2.17

Given the facts described in part 1 and 2 below (however, consider each part as separate questions independent from each other), please describe what you would expect to happen to the CURRENT (that is, March 2, 2017) price and quantity consumed of domestically (U.S.) produced personal computers? Assume that the market for personal computers is nationwide, and that prices and outputs are determined by “normal competitive” forces. Please use graphs as part of your answer. Each subpart is a separate question.

Part 1. The cost of computer chips that are purchased (as an input) by personal computer manufacturers and used in their production or assembly of personal computers increases. (25 Points)

Part 2. Consumers expect that the quality (and speed) of the computer chips that are used in the production or assembly of personal computers will drastically improve beginning in mid- March 2017, while also expecting that the cost of these computer chips will rapidly decline beginning in mid-March 2017 through the rest of the year. (25 points)

 


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