Software programs have been introduced that allow you to use your personal computer like a telephone to talk to others who own the same software. One such program costs $50 to buy and allows you to make unlimited calls for free. The economics of
substitutions and complements are present in this scenario. a . Explain in economic terms the effect of these products on the market for long distance telephone service. b. Explain in economic terms the effect of these products on the market for personal computers.
a . Since these computer calls are substitutes for telephone calls, the demand for traditional long distance
telephone calls will fall, leading to lower long distance rates and fewer long distance telephone calls.
b. Since these packages and personal computers are complements, the introduction of these packages will
increase the demand for personal computers, leading to higher computer prices and more computers
traded, ceteris paribus.
You might also like to view...
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C
Exhibit 36-2 Stock High Low Close Net chg. Dasher 17.25 16.75 17.00 (A) Dancer 34.85 34.25 (B) +0.25 Prancer 56.50 55.90 56.00 (C) Vixen 65.90 (D) 64.75 -0.75 Refer to Exhibit 36-2. If the closing price of Dasher's stock on the previous day was $17.50, what value goes in blank (A)?
A. -0.50 B. +0.50 C. -0.25 D. -0.75 E. There is not enough information given to answer this question.
The credit spread between government bonds and corporate bonds is ________
A) countercyclical and coincident B) procyclical and coincident C) procyclical and lagging D) countercyclical and leading E) acyclical
The components of a well-run incentive compensation scheme include all of the following EXCEPT
a. evaluating the identified performance measures b. avoiding rewards for outcomes that are not included in the performance measures c. rewarding workers who for meet performance measures d. displaying the wealth disparities between the executives and the line workers