Question
1.Suppose you work for a tennis racket company. While sitting in on a meeting with the forecasting team, a senior analyst lets the team know
1.Suppose you work for a tennis racket company. While sitting in on a meeting with the forecasting team, a senior analyst lets the team know that they have heard from a friend who works for a tennis ball company that business is going very well. Apparently, a recent article has shown evidence that playing fetch with your dog has numerous health benefits. The article got picked up in some national morning news shows and made the rounds on social media. Their friend has told them that this increase in demand for tennis balls has driven the price up and resulted in higher sales. The analyst goes on to say that this increase in demand bodes well for your own company, and that they predict higher sales in the next couple months. You even catch them throwing out the term "complimentary goods" while trying to impress the lead analyst. Using what you know, do you agree with the senior analyst? Why or why not? What if the analyst had instead heard that the tennis ball company had discovered a new, cheaper way to produce the balls (coming to the same conclusion about what it means for your company), would you agree in that case? Why or why not? (Hint: What is the definition of a complement in economic context? Is the relationship based on price or quantity of the complement good?)
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