The A-Phone and the Pomegranate

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MICRO Week 1 IP Assignment

There are 2 brands of cell phones that are almost identical except for some minor

features: the A-Phone and the Pomegranate. Draw the demand curve for the A-Phone.

Explain how the graph, price, and quantity demanded will change if there is an overall

increase in income. It is discovered that there are health concerns when using cell

phones. What happens to the supply of cell phones if the market price goes up? Explain

what happens to the price and quantity supplied and how it reflects on a graph if it

becomes more expensive to produce cell phones. Another company starts producing cell

phones, and now there are 3 producers in the market. Draw a graph which shows the

equilibrium price of cell phones. Explain what the graph is showing. When the new

manufacturer introduces the Robo cell phone to the market, how does that affect the

equilibrium price if the Robo is basically the same as the other cell phones? As the

public’s dependence on cell phones continues to grow, the cost of the phones may be

decreasing, but the stronghold that telecommunication companies have on the public in

regards to contracts and climbing fees is alarming. Additionally, all cell phone

companies charge about the same prices, and the consumers do not have much choice in

substituting providers. Consumers appear to need some controls in this regard, and the

government decides to step in. What is the effect of government intervention in the cell

phone market? Make sure that you use graphs to illustrate your point. Is this a good

thing for consumers? On the other hand, the government sees the increase in cell phone

use as an opportunity to make some additional revenue, and it decides to tax service

providers. Who is really paying the tax? Illustrate your conclusion on a graph. Do you

think that there is a free market for cell phone users? Why or why not?

Demand Curve : Quantity vs. Price relationship.

A cell phone is more of a luxury than a necessity and is also our method of communicating

with each other. Through the use of cell phone we are able to communicate rapidly in

addition to play music, video, SMS text messaging and surfing the internet. The A Phone and

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