Impact of Decreasing GPS Systems Price

What happens when the price of GPS systems decreases?

Based on the law of demand, what is the likely outcome?

a. a decrease in the quantity of GPS systems demanded

b. an increase in the demand for GPS systems

c. a decrease in the supply of GPS systems

d. an increase in the quantity of GPS systems demanded

Answer:

The correct answer is d. an increase in the quantity of GPS systems demanded.

When the price of GPS systems decreases, according to the law of demand, the quantity demanded of GPS systems will increase. This is because consumers are more likely to purchase more GPS systems as they become relatively cheaper compared to other goods. This increase in quantity demanded is a result of the inverse relationship between price and quantity demanded.

It is important to differentiate between demand and quantity demanded. Demand refers to the overall willingness and ability of consumers to purchase a good at various prices. On the other hand, quantity demanded specifically refers to the amount of a good that consumers are willing and able to purchase at a specific price.

Furthermore, the decrease in the price of GPS systems is unlikely to lead to a decrease in the supply of GPS systems. The law of supply states that as the price of a good increases, the quantity supplied of that good will also increase. Therefore, the decrease in price should not impact the supply of GPS systems.