a. You lower your price, and at the same time, many of the local rivers are closed to fishing due to a drought or forest fires. b. You lower your price, and at the same time, a new movie about fly-fishing is released and draws record
Suppose you are a fly-fishing guide. Your bookings of late have been low, and you are thinking of lowering the price of your guide service. If you lower your price, you’d expect more clients, ceteris paribus. But if other events occur at the same time as you decrease your prices, the expected increase in clients might not happen. Discuss possible outcomes in the following situations:
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a. You lower your price, and at the same time, many of the local rivers are closed to fishing due to a drought or forest fires. |
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b. You lower your price, and at the same time, a new movie about fly-fishing is released and draws record attendance at the theaters. |
a)in first case the demand would drop down considerably as river are down so people will not be fishing.
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