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You are the manager of a midsized company that assembles personal computers. You purchase most components, such as RAM, in a competitive market. Based on
You are the manager of a midsized company that assembles personal computers. You purchase most components, such as RAM, in a competitive market. Based on your marketing research, consumer income and computer purchases are positively related. One morning, you pick up a copy of The Wall Street Journal and read an article indicating that input components for RAM are expected to rise in price, forcing manufacturers to produce RAM at a higher unit cost. The equations used in the graphs below are P = 1000-Q and P = 100 2Q. A) Fully label and modify Graph A to illustrate the effect of rising RAM prices on the personal computer market (show price and quantity changes). Briefly explain your results. B) Fully label and modify Graph B to illustrate the effect of an increase in household incomes on the personal computer market (show price and quantity changes). Briefly explain your results. Note: your answers here should not include changes in part A. C) Now, use Graph C to put together the changes in Graphs A and B and discuss the possible outcomes with respect to the market price and quantity in the personal computer market
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