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Draw a supply curve, and assume it is the supply curve for iPhones
Draw a supply curve, and assume it is the supply curve for iPhones. Suppose the price of microprocessors decreases. Microprocessors are an input used in the production of iPhones. Draw what happens to the supply curve for iPhones. Use arrows and/or labels to clarify where necessary.
Expert Solution
As the price of microprocessors decreases then the cost of production of iPhones decreases which results in rightward shift in the supply curve of iPhones with the same demand curve of iPhone such that the price of iPhone decreases and quantity of iPhone increases in an economy.
In the above diagram, as the supply shifts from S0 to S1 then the price decreases from P0 to P1 and Quantity increases from Q0 to Q1. The new equilibrium is achieved at point E1.
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