Answer to Question #24577 in Microeconomics for saad

Question

Assume that silk shirts have become particularly fashionable recently due to popular celebrities having their pictures taken wearing them. In the market for silk shirts, the most likely result would be:


A. P* up, Q* down


B. P* up, Q* up


C. P* down, Q* down


D. P* down, Q* up


E. A movement to the right along the demand curve.

Answer 1

B. P* up, Q* up
Changes in tastes and preferences change demand. Current trends and fads affect demand for specific goods as well. Because of this, businesses may try to shape opinion through advertising.