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29 September, 21:44

If the price of flash memory chips used in manufacturing smartphones decreases, what will happen in the market for smartphones? how will the equilibrium price and equilibrium quantity of smartphones change?

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  1. 29 September, 21:50
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    Flash memory and smart phones are complementary goods, which means that a demand for one good give rise to a demand for the other good. If there is a decrease in the price of the memory flash, the demand for it will increase while the supply for it will decrease. The decrease in supply of flash memory will leads to a decrease in the supply of smart phones in the market. If there are less smart phones in the market, the price of the smart phones will increase.
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