Asked by Nadiya Prashaud on Jul 18, 2024
Verified
Consider a market for coffee that is initially in equilibrium.If tea harvest is bad in a particular year,then identify the most likely impact on the equilibrium price and quantity of coffee.
A) The price of coffee will increase,while the quantity of coffee will decrease.
B) Both the price and the quantity of coffee will increase.
C) The price of coffee will decrease while the quantity of coffee will increase.
D) Both the price and the quantity of coffee will decrease.
E) There will be no impact on the equilibrium price and quantity of coffee.
Tea Harvest
The process of collecting the mature leaves from tea plants, typically occurring seasonally, which impacts the supply of tea in the market.
Equilibrium Price
The price at which the quantity of a good or service demanded equals the quantity supplied, leading to market stability.
Equilibrium Quantity
The quantity of goods or services supplied is exactly equal to the quantity demanded at the market price.
- Acquire knowledge about how complementary and substitute goods influence market movements.
- Peruse market situations to ascertain the repercussions of variations in supply and demand on the directional alteration of equilibrium price and quantity.
Verified Answer
VP
Vatsal PatelJul 19, 2024
Final Answer :
B
Explanation :
A bad tea harvest would likely increase the demand for coffee as a substitute, leading to both higher prices and quantities sold.
Learning Objectives
- Acquire knowledge about how complementary and substitute goods influence market movements.
- Peruse market situations to ascertain the repercussions of variations in supply and demand on the directional alteration of equilibrium price and quantity.