INSTRUCTOR DISCUSSION NOTES:
Chinese Toymakers’ Losses Are US Toymakers’ Gains

1. Assuming parents do not forget about the problems with Chinese-made toys as the holiday season approaches, what do you expect to happen to the price of those toys? Why?

As demand will continue to drop, the price can be expected to fall.

2. What would you expect to happen to the price of Chinese-made toys as these production issues (i.e, the use of paint with lead) are eliminated? Why?

As this potentially could be an increase in production costs, it would involve a reduction in supply. This will raise the price.

3. Are these recalls making US-made toys more or less competitive with Chinese-made toys? Why?

US-made toys are becoming more competitive relative to Chinese-made toys, because the solution will be for Chinese manufacturers to adopt production techniques that US manufacturers already employ.

Multiple Choice/True False Questions

1. US-made and Chinese-made toys can be considered
  1. Substitute goods
  2. Complementary goods
  3. Luxury goods
  4. Necessary goods
ANS. A

2. According to this article, the price of US-made toys can be expected to
  1. Increase.
  2. Decrease.
  3. Stay the same.
  4. Become more expensive than most people can afford.
ANS. A

3. One can expect the price of US-made toys to fall again around Christmastime.
  1. True
  2. False
ANS. A

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