(Answered) 5. Problems and Applications Q4Consider the market for mobile applications, smartphones, and…

5. Problems and Applications Q4Consider the market for mobile applications, smartphones, and conventional phones.
For each pair, identify whether they are complements or substitutes:
Pairs of Goods and Services
Complements
Substitutes
Mobile applications and smartphones
Mobile applications and conventional phones
Smartphones and conventional phones
Suppose a network externality reduces the cost of developing cell phone applications. Show the effect of this change on the market for cell phone applications. Next, show the effect the previous change in the market for cell phone applications has on the market for conventional phones. Finally, show the effect the previous change in the market for cell phone applications has on the market for smartphones.