Question

Suppose there is a permanent shift of consumer preferences away from pretzels and toward potato chips. The most likely result would be _______.

Answer 1

Answer:

The correct answer is Short run profits in the potato chip market.

Explanation:

The amount of the short-term gain is the difference between the capital asset base, usually the purchase price paid to buy it, and the sale price received for selling it. This means that short-term gains are generally taxed at the highest marginal tax rate of the taxpayer, while long-term capital gains are taxed at the tax rate of capital gains, which is often lower than the tax rate. marginal of a person.

The proposed scenario corresponds to a temporary situation, which can be caused by a specific event, a weather station, accessibility, etc. For this reason it is expected that in the short term sales of potato chips will increase, and on the contrary those of pretzels will decrease.

Sellers of both fries and pretzels know in advance what the behavior of their merchandise is, and they will recognize that the increase in one will mean the decrease in the other and vice versa.