00:01
Hello, i'm going to answer your question about what will be the impact in the reduction of tariffs on ipods on the equilibrium price quantity of the sony walkman.
00:09
For doing that, i'm going to use the four steps.
00:12
So the first step will be to grab the original demand and supply for the sonic walkman.
00:17
As you can see in the vertical axis is the price and in the horizontal axis is the quantity of sony walkman.
00:24
In this kind of setup, as is normal, the demand has a negative slope, which means that as the the price increases the quantity demanded will be reduced and the supply have the opposite behavior.
00:36
As the price increases, the quantity demand will be increased.
00:40
The second step is to understand which co -fit effect, demand or supply.
00:44
The answer would be demand.
00:45
The mechanism would be supplementary goods.
00:47
So with a supplementary good such as the ipad getting in the market at a cheaper price, people would like to change their consumption preference.
00:57
The step three would be to decide what is the achievement, what is the movement, and in this case would be a movement to the left.
01:03
So based on the change of the price of ipods, that would make that people would like to consume less of this sony walkman...