In the Market for Running Shoes, Suppose the Cost of Rubber

question 22

Multiple Choice

In the market for running shoes, suppose the cost of rubber used in their production rises, while at the same time the popularity of running as a sport increases. If the latter effect is stronger in magnitude, what is the change in equilibrium price and quantity?

• A) Equilibrium price and quantity both rise.
• B) Equilibrium price rises and equilibrium quantity is indeterminate.
• C) Equilibrium price rises but equilibrium quantity falls.
• D) Equilibrium price falls and equilibrium quantity is indeterminate.

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