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The cost of sensors used in making digital cameras falls, while a successful ad campaign makes digital cameras more fashionable. As a result, the equilibrium price of digital cameras ________ and the equilibrium quantity ________.a. increase; increase.b. increase; may increase or decrease-- can't really tell without more info.c. may increase or decrease; increase.d. decrease; increase.

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Answer:

C) may increase or decrease; increase.

As a result, the equilibrium price of digital cameras may increase, decrease, or stay the same and the equilibrium quantity increases.

Explanation:

We know for sure that the quantity demanded for digital cameras will increase, therefore increasing the equilibrium quantity.

Since the price of a key input falls, the price of digital cameras should decrease, but we must also consider the increase in the quantity demanded, which could generally increase the price of a product. So it is uncertain whether the price of digital cameras will increase, decrease or remain the same because opposing factors are involved.

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