Question

Homework: Assignment 3 Save 3 of 10 (10 complete) HW Score: 77.5%, 7.75 of 10 pts core: 0.25 of 1 pt > Concept Question 5.3 Question Help Consider the market for CD players, illustrated in the figure to the right. Suppose there are network externalities in this market such that the quantity of a good demanded grows in response to the growth of purchases by other individuals (as indicated by the demand curve "Demand" in the figure). Suppose that he price is initially $70 where the quantity demanded is 150 (thousand CD players per month). 1804 D90 D150 1604 Demand f the price of CD players falls to $50, demand will increase to 180 thousand CD players per month. Enter your response using an integer.) Of this increase, thousand units of the 30 thousand-unit increase is the pure price effect and housand units of the increase is the bandwagon effect. Price D60 D120 D180 20 40 60 80 100 120 140 160 180 200 220 CD Players (thousands per month) inter your answer in the edit fields and then click Check Answer.

Answer 1

The first part is correct

Pure Price effect = quantity change while moving on same Demand curve

Pure price effect = 160 - 150 = 10 thousand units

Band wagon effect = 30 - 10 = 20 thousand units