In 2012 Nike Reduced the Price of Its Running Shoes

question 221

Multiple Choice

In 2012 Nike reduced the price of its running shoes by 20 percent. As a result, the substitution effect caused

• A) the demand for Nike shoes to increase.
• B) people to switch from Adidas shoes and buy more Nikes.
• C) the relative price of Nikes to increase.
• D) the demand curve for Nikes to shift rightward.

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Definitions:

Levels

Levels refer to the different positions or stages in a hierarchical structure or process, indicating varying degrees of magnitude, importance, or progress.

Efficient Scale

The level of production that minimizes long-term average total costs, resulting from economies of scale without incurring diseconomies of scale.

Marginal Cost

The supplementary cost attached to the output of an additional product or service unit.

Diminishing Marginal Product

The principle stating that as one inputs more of a factor of production while holding other inputs constant, the added output produced from each additional unit of the variable input eventually decreases.