Question

In: Economics

If there is a huge drop in the popularity of fidget spinners (round playthings) and more...

If there is a huge drop in the popularity of fidget spinners (round playthings) and more companies making fidget spinners, then the following is true?

A.

The prices of the spinners will be uncertain.
B.

Sales of the spinners will be higher.
C.

Price will fall.
D.

Sales will go down.
E.

There is no exact answer for what will happen with the price and quantity sold (sales), since we do not know the size of the shifts in S and D.

Solutions

Expert Solution

Drop in popularity of spinner will decrease demand so demand curve will shift left ,so as a result price and quantity will decrease.

More firms making spinner will increase supply of spinner and supply curve shift right,so as a result price will decrease but quantity will decrease.

Conclusion: due to combine effect of both change will lead to decrease in price of spinner but change in sales will be uncertain.

So option C is correct.

Rahul Sunny answered 2 years ago
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