Problem
Use the following quote from the January 17, 2023, article "The vinyl revival is coming to a crashing halt - but don't blame Taylor Swift" published by techradar.com to answer the following questions.
But after years of meteoric growth - 17 consecutive years, to be precise - sales of vinyl records in the U.S. have stalled. That news comes via Billboard, which, citing data in the U.S. 2022 Luminate Year-End Music Report, notes that vinyl sales in 2022 rose a mere 4.2% over the previous year.
When you compare that figure to sales numbers for the prior two years, with 46.2% and 51.4% year-over-year increases in 2020 and 2021, respectively, it's clear that the vinyl record revival has not just hit the brakes, but skidded off the track. How this impacts future sales of the best turntables is unclear, but another data point from the Luminate report indicates playback hardware isn't even at issue since 50% of consumers who had bought vinyl over the previous 12 months don't even own a record player.
• Part I: Draw, and clearly label, the market for vinyl records. Identify equilibrium (E1), as well as the equilibrium price (P1) and quantity (Q1).
• Part II: Based on what we've discussed in this unit, (i) which side of the vinyl records market (i.e., buyers or sellers) do you think has been responsible for the 17 consecutive years of increased sales of vinyl records in the U.S.? Explain your answer. (ii) Considering the market model for U.S. vinyl records, and the factors that cause markets to change, how would you explain the increase of quantity sold? Explain your answer.
• Part III: Using the model that you drew in Part I, illustrate the impact of the factor you identified in Part II on the vinyl market model. Draw this on the same graph as Part 1 and label the curve you shift as either D2 or S2. Identify the new equilibrium and label it E2. Identify and label the new equilibrium price (P2) and quantity (Q2).
• Part IV: Consider the last sentence of this article excerpt. Based on economic concepts that we've discussed in this unit, and ignoring the reported fact "50% of consumers who had bought vinyl over the previous 12 months don't even own a record player", what would you expect to happen to the sales of record players (turntables) if the quantity of vinyl records sold increased?