Computers are a complement to computer software. Suppose the ...

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Computers are a complement to computer software. Suppose the price of a computer falls. Simultaneously, suppose that the number of companies selling computer software decreases.
 
  How do these changes affect the price and quantity of computer software?

Question 2

If Mr. McConaughey has 7 hours to spend with friends and family and breaking a sweat, he will maximize his utility if he spends
 
  A) 2 hours with family and friends and 5 hours breaking a sweat.
  B) 5 hours with family and friends and 5 hours breaking a sweat.
  C) 4 hours with family and friends and 3 hours breaking a sweat.
  D) 3 hours with family and friends and 4 hours breaking a sweat.

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Answer to Question 1

The fall in the price of a computer increases the demand for computer software and the demand curve for computer software shifts rightward. A decrease in the number of sellers decreases the supply of computer software and the shifts the supply curve of computer software leftward. The increase in demand and decrease in supply both raise the price, so the price definitely rises. The increase in demand increases the quantity and the decrease in supply decreases the quantity. Hence the net effect on the quantity is ambiguous.

Answer to Question 2

D