Activity bracelets and personal training sessions are substitutes in consumption

Question

Activity bracelets and personal training sessions are substitutes in consumption while personal training sessions and group exercise classes are substitutes in production. If the price of activity bracelets rises at the same time that the price of group exercise classes falls, how will equilibrium in the market for personal training sessions be affected?

a. The equilibrium price of personal training sessions will rise, and the equilibrium quantity of personal training sessions will be indeterminate

b. The equilibrium price of personal training sessions will fall, and the equilibrium quantity of personal training sessions will be indeterminate.

c. The equilibrium price of personal training sessions will be indeterminate, and the equilibrium quantity of personal training sessions will rise

d. The equilibrium price of personal training sessions will rise, and the equilibrium quantity of personal training sessions will rise.

By definition, if personal training sessions and group exercise classes are substitutes in production, what is the relationship between personal training sessions and group exercise classes? a. Consumers view personal training sessions and group exercise classes as alternatives for one another. b. Producers can use the same resources to provide personal training sessions or group exercise classes. c. Group exercise classes can only be supplied if personal training sessions are also supplied with them. d. Personal trainers are not qualified to teach group exercise classes, and classrooms where group exercise classes take place could not be used for personal training sessions.

(please explain both questions,)

Explanation / Answer

Answer

The correct Answer is c) The equilibrium price of personal training sessions will be indeterminate, and the equilibrium quantity of personal training sessions will rise

Activity bracelets and personal training sessions are substitutes in consumption. If Price of activity bracelets rises Thendemand of Personal Training Sessions increases and Demand of Personal Training Sessiom will shift to the Right.

Personal training sessions and group exercise classes are substitutes in production.If the price of group exercise classes falls. They they will supply more of Personal Training Sssion. Hence Supply will Shift to the Right. Hence Equilibrium Quantity will Rise for sure as both demand and supply shifts to the right. But Equilibrium Price is inderterminate Because If Rightward shift to demand is greater than supply then Price will increase, If it is lesser than supply then price will decrease and If if it equal to supply then Price will remains Constant.

Hence The correct Answer is (c) The equilibrium price of personal training sessions will be indeterminate, and the equilibrium quantity of personal training sessions will rise

2)

the correct answer is (b) Producers can use the same resources to provide personal training sessions or group exercise classes  

As, personal training sessions and group exercise classes are substitutes in production, this means that there is no role of consumers in it. As the name substitute suggest that we can substitute or replace group exercise classes with personal training sessions or vice versa. This means Producers can use the same resources to provide personal training sessions or group exercise classes.

Hence, the correct answer is (b) Producers can use the same resources to provide personal training sessions or group exercise classes  

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