FSOT Pro

Category - Economics

Which of the following scenarios would not produce an outlier in standard supply and demand theory?
  1. The cost of non-perishable food items or emergency supplies like batteries prior to a declaration of war or other foreseeable mass catastrophe
  2. The cost of a new gadget at the time of its public release
  3. The cost of a popular, much-hyped toy in December
  4. The cost of a popular holiday food the week before the holiday
Explanation
Answer: D - The cost of a popular holiday food the week before the holiday with which it is associated would not deviate from the standard relationship of supply and demand. Though the demand for popular holiday foods does increase tremendously before the holiday, suppliers generally aim to produce enough to meet the higher demand, keeping costs roughly the same as they would be at any other time. Over-production or sales promotions often lead to lowered prices for items in demand, in fact. The other situations are relatively rare or infrequent events that cause a consumer's average degree of need or “demand” to soar beyond standard practice, making those purchases some of the most costly a consumer may ever encounter.
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