Question: Suppose a decrease in the world demand for desktop computers causes the price of desktop computers to fall from $600 to $500. Before the fall

Suppose a decrease in the world demand for desktop computers causes the price of desktop computers to fall from $600 to $500. Before the fall in demand, Juna, a local computer dealer in Japan, used to produce 9,000 desktop computers and exported 50 percent of it to other countries every week. However, after the fall in demand, Juna reduced its production to 8,000 units and exports only 40 percent of its total output.

a. What are the changes in the quantity sold to domestic consumers?

b. What are the changes in the consumer surplus?

c. Sketch a diagram to illustrate the changes for Juna.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Of Public Issues Questions!