course material

1. SSE103 Introduction To Microeconomics
Answers:
Answer To Question 1:
Requirement A)
TV screens and DVDs are the complementary goods because DVD’s can also be used for the
TV screens.
DVD and movie tickets are the substitute goods as they can be used in place of one another.
For instance, if a person fails to buy the movie tickets, he or she can use DVD to watch a
movie and vice versa.
TV screens and movie ticket can be considered to be substitute because movie can be
watched either on TV screen or by buying a ticket to watch in theatre.
Requirement B)
A reduction in the cost of manufacturing TV screens due to the technological advancement
would induce the supplier or sellers to produce more TV screens as manufacturing cost
reduces. This in turn would cause an increase in the supply of TV screens and thereby
pushing an upward pressure on the supply which shifts the supply curve of TV screens
towards the rightward direction (Banerjee 2021). The market of TV screen can be shown
graphically.
The above graph shows the market for TV screens and increase in supply shift supply curve
to S1 from So and price decline from Po to P1 and quantity demanded increases to Q1 from
Qo.
Requirement C)
Market for DVD:
Since, the demand for TV screens has increased due to lower price, consumers would
demand more DVDs as both the products are complemented. Increase in demand for DVD

2. would shift the demand curve in the upward direction from Do to D1 and this would push
up the price of DVDs.
Market for movie tickets:
Since the TV screens price has decreased due to technological advancement that cause
increased supply, consumer would prefer not to buy movie tickets and watch movie at
home. Hence, demand for movie tickets would decline from D1 to Do and there would be fall
in movie tickets prices from Po to P1.
Answer To Question 2:
Requirement A)
Damage of crops would reduce the quantity of crop supplied as the raw materials for
sweatshirts (Chen and Lin 2020). A reduction in raw materials of sweatshirt would reduce
the overall supply of sweatshirt from So to S1 with demand remaining the same at D. This
would put an upward pressure on price from Po to P1 and reduce the quantity of
sweatshirts demanded from Qo to Q1.
Requirement B)
Inventions of new knitting machines would increase sweatshirt supply to S1 from So, which
would lower the price and increase the quantity demanded to Q1 from Qo.
References List:
Banerjee, S., 2021. Intermediate microeconomics: a tool-building approach. Routledge.
Browning, E.K. and Zupan, M.A., 2020. Microeconomics: Theory and applications. John Wiley
& Sons.
Chen, J. and Lin, T.F., 2020. Do Cooperative-Based Learning Groups Help Students Learn
Microeconomics?. SAGE Open, 10(3), p.2158244020938699.