Consider the Competitive Markets for Running Shoes and Gym Memberships

question 4

Multiple Choice

Consider the competitive markets for running shoes and gym memberships, two complementary products.Assume that the laws of demand supply hold in each market.You observe the following facts in the two markets: in the running shoe market both the price and quantity traded fall; and in the gym membership market the price increases and the quantity traded falls.What change could explain these changes?

• A)The cost of rubber, an input into running shoes, increases.
• B)The cost of rubber, an input into running shoes, falls.
• C)New computer and security technology allows gyms to operate with fewer staff.
• D)New medical research shows that people that exercise regularly live longer and are happier.
• E)A new workplace safety law requires that all gyms need to have more and better trained staff.

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Definitions:

Dress

Clothing, particularly outer garments or apparel for men, women, or children.

Frustration of Purpose

A legal doctrine that excuses parties from their duties under a contract when an unforeseen event undermines the contract's fundamental purpose, through no fault of either party.

Coronation

A ceremonial event that marks the formal investiture of a monarch or a sovereign with regal power.

Contracted

Entered into a formal and legally binding agreement between two or more parties outlining specific obligations.