In: Economics
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. |
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B. |
Sales of the spinners will be higher. |
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C. |
Price will fall. |
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D. |
Sales will go down. |
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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. |
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.