Question

Use the four-step process to analyze the impact of the advent of the iPod (or other portable digital music players) on the equilibrium price and quantity of the Sony Walkman (or other portable audio cassette players).

Short answer

Step 1: This solution contains the initial supply and demand diagram.

Step 2) The introduction of the iPod will have an impact on Sony Walkman demand.

Step 3) If the iPod is less expensive than the Walkman, the demand for the Walkman will decline.

Step 4) The Walkman demand curve will shift to the left. The quantity of equilibrium will diminish, as will the price. Within this solution, you'll find an updated diagram.

Step-by-step solution

Definition

Demand:

The overall quantity that customers ask for in the market is referred to as demand. Firms carry out their manufacturing processes in accordance with demand mechanisms and make commodities available to consumers. In exchange, the businesses generate revenue from the general public.

Explanation

Step 1: Below are the original supply and demand diagrams. The equilibriums are shown by the red dot.

Step 2) The introduction of the iPod will have an impact on Sony Walkman demand.

Step 3) If the iPod is less expensive than the Walkman, the Walkman's popularity will decline.

Step 4) Please see the updated supply and demand diagram below. Price (P1) and quantity (Q1) are both lowering when the demand curve shifts to the left. The new equilibriums are indicated by the red dot.