Consider a market for kids' shoes that is initially in equilibrium.For a given upward-sloping demand curve,an increase in the price of Velcro which is used as fasteners for kids' shoes will result in a(n):

Question

Quizplus · Accepted Answer

An increase in the price of Velcro, a key input in the production of kids' shoes, will lead to an increase in the cost of production for shoe manufacturers. This will shift the supply curve to the left, leading to a decrease in the equilibrium quantity of shoes. At the same time, the increase in production costs will lead to an increase in the equilibrium price of shoes. Therefore, the correct answer is C - an increase in equilibrium price but a decrease in equilibrium quantity of shoes.

Consider a Market for Kids' Shoes That Is Initially in Equilibrium.For