Test your understanding of economics in the news: Is this a change in supply or a change in demand?
In the January 1, 2010 New York Times article " Next Up on Cable TV, Higher Bill for Consumers ," Brian Stelter reports that cable TV companies are paying higher fees for the programs they broadcast. Using the ceteris paribus assumption that ignores other potential changes, what is the likely effect on the market for cable TV if increasing numbers of networks demand higher fees from the cable companies in order to broadcast their programs? Is this (a) an increase in the supply of cable TV, (b) a decrease in the supply of cable TV, (c) an increase in the demand for cable TV, or (d) a decrease in the demand for cable TV? Will the equilibrium price of cable TV increase or decrease as a result of cable TV companies paying higher fees for the programs they broadcast ? Read the article below and then illustrate this price change with a graph that shows the initial positions of the supply and demand for cable TV and the new positions of the supply and demand curves. (Hint: Does ...