Question

Assignment Score: 77.7% Resources Hint Check Answer Question 20 of 23 > The accompanying graph depicts a hypothetical market for analog TVs. In June 2009, the U.S. Federal Communications Commission (FCC) mandated that all over-the-air television broadcasts originating in the U.S. must be broadcast digitally instead of the traditional analog signal. These digital transmissions cannot be decoded by traditional analog TVs but require either a digital decoder be attached to an analog TV or a natively digital TV. Both sellers and consumers were made aware of the upcoming switch from analog transmission to digital several years before the mandate took effect. Demonstrate on the graph how the market for analog TVs changed immediately following the announcement of the switch to digital. For the supply side, focus on the end seller (such as an electronic store) of a TV and not the manufacturer. Market for Analog TVs

Answer 1

If all the over-the-air television broadcasts must be broadcasted digitally instead of the traditional analog signal, then the demand for analog TVs will fall, and the demand curve will shift to the left. This would be the reaction of the buyers. Sellers, however, immediately after the announcement would want to get rid of their stored analog TVs and therefore, will increase the supply. This will shift the supply curve to the right. This is represented as follows: Price Supply Supply Demand Demand Quantity