Tire RackCom Is an Online Seller of Tires That Currently Has

question 22

Multiple Choice

Tire Rack.com is an online seller of tires that currently has a 14 percent share of the replacement passenger and light truck tire market in the United States and has a 25 percent share in Canada.Tire Rack not only sells tires but also sells wheels and offers mounting and balancing services.It does not offer installation services,but it partners with 8,100 installation providers in the United States,all of whom agree to charge standard installation fees based on tire size.The online presence of Tire Rack.com ________.

• A) lowers search costs for the best tire deal and makes local tire markets more competitive regardless of the number of brick-and-mortar tire dealers
• B) lowers search costs for the best tire deal but has no impact on local tire markets, because it does not provide tire installation services
• C) lowers search costs for the best tire deal but actually makes local tire markets less competitive, because it has partnerships with tire installers
• D) does none of the above

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Definitions:

Perfectly Elastic

Describes a situation in economics where the demand or supply for a product can vary infinitely with a small change in price.

Inelastic

A situation in which the demand for a product does not increase or decrease correspondingly with a fall or rise in its price.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied changes infinitely in response to any change in price.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where market supply and demand balance each other.