Assume that the price of rubber increased at the same time that Michael Jordan,

Question

Assume that the price of rubber increased at the same time that Michael Jordan, arguably the best NBA basketball player of all time, became famous. What do you expect to happen to the equilibrium price and equilibrium quantity of the basketball shoes that are promoted by Michael Jordan? Question 15 options: A. Equilibrium price will go up and equilibrium quantity will go down. B. Equilibrium price will go up and equilibrium quantity will go up. C. Equilibrium price will go down and equilibrium quantity will be indeterminate. D. Equilibrium price will go down and equilibrium quantity will go up. E. Equilibrium price will go up and equilibrium quantity will be indeterminate.

Explanation / Answer

E. Supply will decrease due to increase in the price of rubber, an ingredient for making shoes. Demand will increase due to the "Michael Jordan effect". When both demand and supply move in opposite directions the change in equilibrium price can be determined but not the effect on output. In this case as demand increases and supply decreases, equilibrium price will increase but the change in quantity cannot be determined.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.