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6 November, 14:10

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

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  1. 6 November, 14:52
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    The higher popularity of digital tablets and electronic pens would lead to a decrease in both the equilibrium quantity and price of pencils in the market.

    Explanation:

    As a result of increase in the demand for electronic pens and digital tablets, the demand for regular pencils will decrease as these all can be considered as substitute products or goods. Now, a decrease in overall demand for regular pencils will lead to leftward or upward shift of the demand curve for regular pencils in the market. As a consequence of a decrease in the demand for regular pencils or leftward shift of demand curve for regular pencils, the equilibrium quantity of pencils in the market will decrease and the equilibrium price of pencils will decrease. Now, higher demand for digital tablets and electronic pens will however, not cause any initial change in the quantity demanded for pencils in the market as there is no change in the price of the regular pencils but will cause a decrease in the overall market demand for regular pencils.
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