Suppose that a new advertising campaign extolling the virtues of apple juice is successful, and a major freeze destroys half of the country's apple crop. What happens to the price and quantity of apple juice?
A. The equilibrium price of apple juice might rise or fall and the equilibrium quantity of apple juice falls.
B. The equilibrium price of apple juice might rise or fall and the equilibrium quantity of apple juice rises.
C. The equilibrium price of apple juice rises and the equilibrium quantity of apple juice might rise or fall.
D. The equilibrium price of apple juice falls and the equilibrium quantity of apple juice might rise or fall.
Answer: C
You might also like to view...
Decreasing returns to scale production functions must be concave.
Answer the following statement true (T) or false (F)
One way to assure that poor people will have a plentiful supply of affordable housing available to them is by imposing rent ceilings
Indicate whether the statement is true or false
Monetary expansion causes the current account balance to increase in the short run. Discuss. Is the same the case for fiscal expansion?
What will be an ideal response?
Assume a market price gets set artificially low-that is, it gets set below the equilibrium price. This change means:
A. Every producer loses surplus, and it all gets transferred to consumers. B. Some producers drop out of the market, and those left lose some surplus. C. Every consumer gains surplus, due to the lower price now being charged. D. None of these is true.