Question

Last year, the "Milligan Shoe Company" had lack luster sales. Instead of making cheaper shoes, they decide to pay Superstar Bad Bunny and his friend superstar Sam Gault to wear a new colorway (color shoe) to their concerts and events. They know this will make people want the shoes, but instead of making their usual 25,000 pairs of these shoes, they only make 2,500 of this color. They then sell them for 5 times the cost as the normal pair. This works because the Milligan Shoe Company has created a

a. superior product
b. a scarcity
c. net loss
d. Trade off

Answer 1

b. a scarcity

By making far fewer of that colorway (2,500 vs 25,000) and using celebrity endorsements, they intentionally created limited supply, raising perceived value and allowing a higher price.