In August, the number of college students living in Boston rose. This caused the demand for printers in Boston to increase. At the same time, the price of printer motherboards (an input) fell for a different reason. Which of the following statements concerning the market for printers in Boston is incorrect?

Question

BlackTom AI · Accepted Answer

An increase in the number of students raises demand (rightward shift); a fall in an input price lowers production costs and raises supply (rightward shift). These are the core supply-and-demand responses.

1) Relevant knowledge points and concepts
- Demand curve shift: more buyers → demand increases (rightward shift).
- Supply curve shift: lower input cost → supply increases (rightward shift).
- Equilibrium quantity moves in the direction of both shifts (if both shift right, equilibrium quantity unambiguously rises).
- Equilibrium price depends on the relative magnitudes of the shifts and is therefore ambiguous when both curves shift in the same direction.

2) Complete reasoning step by step
- More college students living in Boston increases the market demand for printers at every price; graphically demand shifts right.
- A fall in the price of printer motherboards reduces producers’ costs, so at every price suppliers are willing to sell more; supply shifts right.
- With both demand and supply shifting right, the new equilibrium quantity is higher than before because both effects increase quantity.
- The new equilibrium price, however, results from the net effect: if demand’s rightward shift is larger than supply’s, price rises; if supply’s shift is larger, price falls; if they offset exactly, price is unchanged.

3) Calculations / intermediate steps (numeric illustration)
- Initial: demand P = 100 − Q, supply P = 20 + Q → 100 − Q = 20 + Q → Q = 40, P = 60.
- Both shift right by 10: demand P = 110 − Q, supply P = 10 + Q → 110 − Q = 10 + Q → Q = 50, P = 60 (price unchanged).
- If demand shifts more, price rises (e.g., demand P = 120 − Q vs supply P = 10 + Q → P = 65).
- If supply shifts more, price falls (e.g., demand P = 110 − Q vs supply P = 0 + Q → P = 55).

4) Why the correct answer is correct
The statement "The equilibrium price of printers must have increased." is incorrect because price change is ambiguous when both demand and supply shift right. There is no necessity that price increases; it depends on magnitudes of shifts.

5) Why the other options are not the incorrect choice
- Equilibrium quantity must have increased: true, since both shifts raise quantity.
- Supply curve must have shifted right: true, because lower input costs increase supply.
- Demand curve must have shifted right: true, because more students raise demand.

6) Conclusion
Therefore, the incorrect statement is "The equilibrium price of printers must have increased." This matches the provided answer.

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