If the price of computer chips rises, it will lead to an increase in the cost of producing computer hardware. As a result, the supply of computer hardware will decrease, which would decrease the equilibrium quantity of computer hardware.
Since hardware and software are complements in consumption, a decrease in the quantity of computer hardware will decrease the demand for software. This decrease in demand for software would lead to a decrease in the equilibrium software price and quantity.
Therefore, the equilibrium software price will decrease and the equilibrium software quantity will decrease.
Computer chips are used to produce computer hardware. Hardware and software are complements in consumption. If the price of computer chips rises, then the equilibrium software price will _____ and the equilibrium software quantity will _____.
1 answer