Module 3 – Writing Assignment 1
Economics for Life ECO-110HA
July 14, 2018
Writing Assignment 1
For writing Assignment 1 we were asked to find a news article that describes a good or service and summarize the situation and identify what supply or demand shift factor is at work. Describe the effect on equilibrium price and quantity given the shift factor. For this assignment I found an article on “How CDs Have Been Supplanted by Music Streaming”.
Over the past few years there has been a tremendous decline in CD sales when being compared to the past years. The reason this has happened is due to the ability to now stream music and videos via the internet, apps, and smart devices etc. Smartphones have become such a demanding product worldwide and is an everyday necessity for many. They have brought a whole new perception on what the future will hold regarding the Apps, and technological advances so far. You can now virtually stream any song, video, or movie from the palm of your hand on applications such as Spotify, Amazon Music, YouTube, and iTunes that can be purchased on the App store or downloaded for free. These applications all have downloading features enabling you to download and stream music on any device, anywhere and anytime. With artists having the capability to sell tracks individually instead of full length albums on CD’s made the music sales production soar through the roof.
Surveys have been done to research what percentage of CD sales were accounted for recorded music sales. In previous years CD’s used to be approximately 96% of all music sales. According to recent surveys on music sale revenues via CD, revealed that CD’s currently only account for less than 16%. This lets me know that the decrease in demand for CD’s is the reason behind the decrease in production. An equilibrium price is defined as a market price where the quantity of goods supplied is equal to the quantity of goods demanded. When observing the decline of CD’s it is clear that the quantity of goods supplied is currently equal to the goods demanded therefore, there is no longer a demand for CD’s. Ultimately forcing the industry to stop production in result stops the sales.