esktop computers have fallen out of favor because consumers

esktop computers have fallen out of favor because consumers prefer portability. At the same time, the components needed to produce a desktop computer have decreased in price. Given these changes, what will happen to the equilibrium price for desktop computers? Choose one: A. We do not have enough information to answer the question given the decrease in both demand and supply. B. The equilibrium price will fall because of the decrease in demand and a decrease in supply. C. The equilibrium price will fall because of a decrease in demand and increase in supply. D. The equilibrium price will rise because of the increase in demand and the decrease in supply.

Solution

Option (C).

Negative consumer preference will lower demand, shifting demand curve leftward, decreasing price and decreasing quantity. At the same time, lower input cost increases supply, shifting supply curve rightward, decreasing price and increasing quantity. The net effect is a definite decrease in price.