15.Both equilibrium price and quantity of athletic shoes increases. For both of these to increase unambiguously requires that demand increase, while the supply relationship remains unchanged. We show this in the graph to the right. In answering this question, we look for an explanation that would only shift out demand, and nothing that would affect supply.

  1. A reduction in the cost of materials used in making the shoes. This would lead to a shift out in supply which cause equilibrium price to fall and quantity to increase.
  2. An increase in the fashionability of athletic shoes. While "fashionability" is a kind of silly word (like "hipness quotient"), it captures the idea that as these shoes become more "popular" the demand curve will shift out, causing price and quantity to both increase.
  3. A decrease in the price of other kinds of shoes. As the price of substitutes falls, the demand for athletic shoes will shift back, causing both price and quantity to drop rather than increase.
  4. An increase in wages of shoe factory workers. Wages of workers are a variable cost in shoe production. As these wages increase, the supply curve shifts back, causing price to rise and quantity to fall.
  5. An increase in the price of athletic socks. Athletic socks, if they matter at all, are a complement to athletic shoes. An increase in the price of a complement will shift demand back, causing price and quantity to both fall.

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