Consider the Market for IPods

question 252

Multiple Choice

Consider the market for iPods. What happens if a fantastic new alternative MP3 player is developed and at the same time a boat carrying a large shipment of iPods is attacked by pirates and sunk?

• A)Price decreases and quantity increases.
• B)Price increases and quantity increases.
• C)The change in price is indeterminate and quantity decreases.
• D)Price increases and the change in quantity is indeterminate.

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Definitions:

Impartial

Not biased, fair; not favoring one side over another.

Insurable Interest

Insurable Interest is a principle requiring that a person purchasing insurance has a stake in the safety and protection of the insured object or individual against loss or damage.

Fraud

Fraud refers to wrongful or criminal deception intended to result in financial or personal gain.

Good Faith

Acting with honesty and sincerity without intention to deceive or defraud in a legal or transactional context.