Exercise 3. Tablets and laptops are substitutes. Due to manufacturer related issues, there

is a deep shortage of tablet-specific parts. What would you expect to happen to the market

(prices, supply, demand, quantity sold) shortly after the parts shortage in for each of the

following products:

a. Tablets?

b. Laptops?

You can answer each point above with a labeled graph or explain in words, taking into

account the differences between a change in the demand (curve) and a change in quantity

demanded.

Tablets and laptops are equal substitutes. In the example it says that due to manufacturer related issues. There will be a shortage of tablets.

a.Tablets

Demand will not be affected for small amounts of tablets.

Supply of tablets will decrease due to shortage of parts for the item. When input decreases, quantity of the tablets decrease.

Price: Just how supply and demand works. When the supply decreases, the demand increases.

Quantity sold: Quantity sold will decrease.

b.Laptops

Supply of laptops remain unchanged.

Demand: demand for laptop increases. As the tablets prices rise. Then people will start buying laptops since they are substitutable items. This will lead to more of demand.