Question

Company 1 has a market share of over fifty percent of the basketball shoe market. The rest of the market is divided between several companies, including Company 2. Recently, Company 2 signed several popular athletes to five-year endorsement deals. Which graph illustrates the likely change in consumer demand for Company 2's basketball shoes over the next five years?

A an increase in supply

B a decrease in supply

C an increase in demand

D a decrease in demand

E an increase in equilibrium price

Fa decrease in equilibrium price

Answer 1

Answer:

the answer is

increase in supply

increase in demand

an increase in equilibrium price

Explanation:

Answer 2

Company 2 will experience the following:

• A. an increase in supply
• C. an increase in demand
• E. an increase in equilibrium price

As a result of the endorsement deals that Company 2 signed:

• They will see an increase in demand because the fans of those athletes will want to buy shoes.
• They will increase supply to meet the increased demand
• The increased demand for their shoes will lead to an increase in their price

Company 2 might not become as dominant as Company 1, but they will see an increase in the sales of their shoes as a result of those endorsements.

We can therefore conclude that Company 2 will both see an increase in demand and price which will enable them to increase supply.

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