Question

Consider the market for cable-based Internet access

service,which isanormal good.Explain whether

the following events would cause an increase ora

decrease in demand or an increase oradecrease in

the quantity demanded.

a.Firms providing wireless(an alternative to cable)

Internet access services reduce their prices.

b.Firms providing cable-based Internet access

services reduce their prices.

e.There isadecrease in the incomes earned by con

sumers of cable-based Internet access services.

d.Consumers'tastes shift away from using wire

less Internet access in favor of cable-based

Internet access services.

Short answer

a. Demand falls

b. Quantity demand increases

c. Demand falls

d. Demand rises

Step-by-step solution

Step1. Introduction

Demand refers to the overall demand curve or the demand function which establishes the relationship between price and quantity demanded.

Quantity demanded is a single point corresponding to a price which indicates how much quantity is demanded.

Step2. Explanation

a. Demand falls: as these goods become relatively expensive than the alternate goods.

b. Quantity demand increases: as the prices falls, and at each price, the corresponding demand will increase.

c. Demand falls: as the income falls, they will demand less.

d. Demand rises: as there is a positive shift in taste and preferences.