(a)
The changes in incentives.
(a)
Explanation of Solution
Apple’s decision about the iTunes increases the customer’s incentive to buy an iPad because the free availability of iTunes with unlimited quantity encourages people to buy the product.
Economic incentives: Economic incentive refers to the additional benefit provided in order to achieve the desired economic activity and it also motivates an individual to perform an economical action.
(b)
Apple’s decision is a microeconomic or a
(b)
Explanation of Solution
Apple’s decision about the iTunes is a microeconomic decision. The reason is that the decision only affects one company and its market does not affect all the economy.
Micro Economics:
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Chapter 1 Solutions
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