Question

1. Consid Homework 2 ECO 205 SHOW ALL OF YOUR WORK FOR CREDIT Due Wednesday February 19th 1. Consider the market for iPhones. Suppose apple builds in a feature that cause iPhone batteries to stop working after 18 months. The immediate effect is that people buy more iPhones. Holding all else equal, what happens to the market equilibrium, supply and demand curves, and for what reason does this change occur? Please state your answer in words and provide a graph to support your explanation. 2. Consider the market for refrigerators. Suppose that a glitch in the manufacturing system causes refrigerators to be produced at twice the normal rate. Holding all else equal, what happens to the market equilibrium, supply and demand curves, and for what reason does this change occur? Please state your answer in words and provide a graph to support your explanation.

Answer 1

in Twis immediate will ellect would be uuease shiht the demand were demand to night 5- D- D's Oupu ture duniand culre new demand e E = old new equilibriure equilibrium In the Hand & will In the long wire fail 9 -> 91 Quentin batteries shalt ean useurs won't realize this buy iphones after they die u 18 monthes run when they realize demand & demand cure will sluft liftwards. Qube 2 With doubles 17 legünahoy 0 gusů mamlachuling supply y Telligilatges and supply cure sluts to night. S S = old supply S- new Qupply E old equilibriedy E = new equilibrum D- demand I creve UU no tel tiratas This happens because of inporement. ů technology which Excuases supply with lowering costly produchou aerie 0 lowering prices.