The cost of producing smartphones has fallen over the past few years. a. Use a supply and

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The cost of producing smartphones has fallen over the past few years.

a. Use a supply and demand diagram to show the effect of falling production costs on the price and quantity of smartphones sold.

b. In your diagram, show what happens to consumer surplus and producer surplus.

c. Suppose the supply of smartphones is very price elastic. Who benefits most from falling production costs – consumers or producers of smartphones?

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Economics

ISBN: 9781473768543

5th Edition

Authors: Gregory Mankiw, Mark P. Taylor

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