Asked by Perla Arceo-Valencia on Jul 03, 2024
Verified
When an increase in the price of wheat,an important ingredient in the production of bread,happens at the same time as an increase in the number of people consuming bread:
A) both the equilibrium price and quantity will increase.
B) equilibrium quantity will decrease,but equilibrium price may decrease,increase,or stay the same.
C) both the equilibrium price and quantity will decrease.
D) equilibrium price will increase,but equilibrium quantity may decrease,increase,or stay the same.
Price Of Wheat
The cost at which wheat is bought or sold in the market.
Consuming Bread
The process of utilizing bread as food, part of dietary consumption practices.
Equilibrium Price
The selling price at which the volume of goods available equals the volume of goods consumers seek.
- Evaluate the effects of simultaneous changes in demand and supply on market equilibrium price and quantity.
Verified Answer
NB
Nestle ButlerJul 06, 2024
Final Answer :
D
Explanation :
When the price of wheat, an important ingredient in the production of bread, increases, the cost of producing bread increases. Therefore, the supply of bread will decrease as the cost of producing it has increased. At the same time, if the number of people consuming bread increases, the demand for bread will increase. Since demand has increased and supply has decreased, the market price of bread will increase (equilibrium price will increase), but the equilibrium quantity may decrease, increase, or stay the same depending on the extent of the shifts in supply and demand. Therefore, choice D is the best answer.
Learning Objectives
- Evaluate the effects of simultaneous changes in demand and supply on market equilibrium price and quantity.