A blogger recently reported that the price of new computers decreased and that the quantity of new computers decreased. This was probably caused by which of the following?

Question

An increase in the number of buyers

A decrease in supply due to a decrease in manufacturing costs

A decrease in demand due to a decrease in buyer income

A decrease in demand due to an increase in the number of sellers

Answer 1

The scenario described involves a decrease in both the price and quantity of new computers. This situation typically indicates a shift in demand or supply.

1. An increase in the number of buyers would generally lead to an increase in demand, likely increasing both price and quantity, which doesn't match the described outcome.

2. A decrease in supply due to a decrease in manufacturing costs would likely decrease prices but would typically increase the quantity supplied, which would not result in a decrease in quantity.

3. A decrease in demand due to a decrease in buyer income could lead to a decrease in both price and quantity, as consumers have less income to spend and may buy fewer computers.

4. A decrease in demand due to an increase in the number of sellers is a bit counterintuitive. Typically, more sellers would increase supply, so this would not lead to a decrease in quantity at the same time.

Given the possibilities provided, the most likely explanation for a decrease in both price and quantity of new computers is:

A decrease in demand due to a decrease in buyer income.