Asked by Kaylan Summey on Apr 30, 2024
Verified
The market for milk is initially in equilibrium.Milk producers successfully advertise to encourage milk drinking.At the same time,more milk producers enter the market.Standard demand and supply analysis tells us that the:
A) equilibrium price and quantity of milk will rise.
B) equilibrium price and quantity of milk will fall.
C) equilibrium quantity of milk will rise,but we can't determine how the equilibrium price will be affected.
D) equilibrium price of milk will rise,but we can't determine how the equilibrium quantity will be affected.
Supply Analysis
The examination of factors that influence the quantity of a product or service that the market can offer at various prices.
Equilibrium Price
The cost point where the amount of a product sought by buyers matches the amount made available by sellers, leading to a state of equilibrium in the market.
Milk Producers
Entities or individuals engaged in the production and supply of milk.
- Estimate the effects on market conditions when there is a simultaneous change in both supply and demand.
Verified Answer
EM
Ethan MenserMay 03, 2024
Final Answer :
C
Explanation :
With the successful advertisement, the demand for milk will increase and the equilibrium quantity will rise. However, with more milk producers entering the market, the supply will also increase which may result in a price decrease or no change at all. Therefore, we cannot determine how the equilibrium price will be affected.
Learning Objectives
- Estimate the effects on market conditions when there is a simultaneous change in both supply and demand.