Katie Chow – 6, Abbey Wong – 28, Elsie Yeung – 34
Economics
News Report - 1
Music on Demand
As the technology is improving rapidly, many human wants can be
satisfied easier than in the past. Downloading music is one of the examples.
More and more people buy less CDs and they just download the songs from
the internet whenever they want to hear. Ten years ago, the song “Swanee
River” was downloaded by the first guy who downloaded songs from internet.
In these ten years, millions of people download songs from the internet at a
very low price or even free.
Analysis
Downloaded music in the internet and CDs are substitutes. W hen
downloading of music from internet become more popular, people will buy less
CDs. Demand for CDs will decreases. Demand curve shifts left. Therefore, the
market price of CDs will drop.
P
D2
D1
S
P1
P2
0
Q2
Quantity
Of CDs
Q1
CDs and CD player are complements. We predict that, while the demand for
the CDs drop, the demand for CD player will drop also. Therefore, demand
curve for CD player shift left. Market price of CD players will drop too.
P
D2
D1
S
P1
P2
0
Q2
Q1
Quantity
of CD
players
Economics
News Report - 1
Extract from TIME Magazine
December, 1, 2003
Katie Chow – 6, Abbey Wong – 28, Elsie Yeung – 34