An economics professor assigns students a short essay to write about an example

Question

An economics professor assigns students a short essay to write about an example in the news that demonstrates the law of supply. One of the students, Matthew, is an avid gamer. He decides to write about GameStop Corporation, the American video game and entertainment software retailer. A portion of Matthew’s essay is below. "The rise of online competitors like Amazon.com that offer low prices and downloadable products has siphoned customers and sales from GameStop. In response, GameStop is lowering its prices, which results in a decrease in the supply of new and used game discs and consoles in its stores.” Matthew receives his essay back from the professor with a note that Matthew was not completely correct in his reasoning. What mistake did Matthew make?

A. Matthew wrote that a decrease in supply results in lower prices. He should have written higher prices result from a decrease in supply.

B. Matthew wrote that supply decreases in response to a decrease in price. He should have written quantity supplied instead of supply.

C. Matthew wrote about GameStop. He should have written about BestBuy.

D. Matthew wrote that more customers are purchasing from Amazon. He should have written that fewer customers are purchasing from Amazon.

Explanation / Answer

B. Matthew wrote that supply decreases in response to a decrease in price. He should have written quantity supplied instead of supply.

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