What are the effects on equilibrium price and quantity of athletic shoes when the price of rubber increases dramatically, and when a movie increases the popularity of athletic shoe... What are the effects on equilibrium price and quantity of athletic shoes when the price of rubber increases dramatically, and when a movie increases the popularity of athletic shoes?
Understand the Problem
The question is discussing two economic scenarios involving the supply and demand of athletic shoes: one due to an increase in the price of rubber affecting supply, and another due to a movie increasing the popularity of athletic shoes. It addresses the effects on equilibrium price and quantity.
Answer
Higher price; quantity depends on changes in supply and demand.
The effects are as follows: 1) An increase in the price of rubber decreases supply, leading to a higher equilibrium price and lower equilibrium quantity. 2) A movie increasing popularity boosts demand, leading to a higher equilibrium price and higher equilibrium quantity. If both happen concurrently, the price will definitely rise, but quantity depends on the relative magnitude of changes in supply and demand.
Answer for screen readers
The effects are as follows: 1) An increase in the price of rubber decreases supply, leading to a higher equilibrium price and lower equilibrium quantity. 2) A movie increasing popularity boosts demand, leading to a higher equilibrium price and higher equilibrium quantity. If both happen concurrently, the price will definitely rise, but quantity depends on the relative magnitude of changes in supply and demand.
More Information
An increase in the cost of rubber, a key input, reduces supply and raises prices. Simultaneously, enhanced popularity from a movie boosts demand and can push prices up further, potentially increasing or stabilizing quantity sold.
Tips
Ensure you consider both supply and demand changes and their combined effects on the market.
Sources
- Market Headlines and Equilibrium Economics - rasihsknights.weebly.com
- Markets, Equilibrium, and Prices - TCI - cdnproduction.teachtci.com
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