4. Problems and Applications Q4 Consider the market for mobile applications, smartphones, and conventional phones. For each pair, identify whether they are complements or substitutes: Pairs of Goods and Services Complements Substitutes Mobile applications and smartphones Mobile applications and conventional phones Smartphones and conventional phones Suppose a network externality reduces the cost of developing cell phone applications. Show the effect of this change on the market for cell phone applications. Demand Supply Price of Cell Phone Applications Quantity of Cell Phone Applications Demand Supply Next, show the effect the previous change in the market for cell phone applications has on the market for conventional phones. Demand Supply Price of Conventional Phones Quantity of Conventional Phones Demand Supply Finally, show the effect the previous change in the market for cell phone applications has on the market for smartphones. Demand Supply Price of Smartphones Quantity of Smartphones Demand Supply