Suppose equilibrium in the market for strawberries is disturbed by two simultaneous events: a wildfıre destroys many acres of coastal land used to plant strawberries, and blueberries (a substitute for strawberries) experience a large price increase. What would we expect to happen in the market for strawberries? The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, and the equilibrium price would increase. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. Both equilibrium price and equilibrium quantity would decrease.
Suppose equilibrium in the market for strawberries is disturbed by two simultaneous events: a wildfıre destroys many acres of coastal land used to plant strawberries, and blueberries (a substitute for strawberries) experience a large price increase. What would we expect to happen in the market for strawberries? The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, and the equilibrium price would increase. The equilibrium price would increase, but the impact on the amount sold in the market would be ambiguous. The equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. Both equilibrium price and equilibrium quantity would decrease.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose equilibrium in the market for strawberries is disturbed
by two simultaneous events: a wildfıre destroys many acres of
coastal land used to plant strawberries, and blueberries (a
substitute for strawberries) experience a large price increase.
What would we expect to happen in the market for
strawberries?
The equilibrium price would decrease, but the impact on the amount
sold in the market would be ambiguous.
The equilibrium quantity would decrease, and the equilibrium price
would increase.
O The equilibrium price would increase, but the impact on the amount
sold in the market would be ambiguous.
The equilibrium quantity would decrease, but the impact on
equilibrium price would be ambiguous.
Both equilibrium price and equilibrium quantity would decrease.
Transcribed Image Text:Refer to the same figure below of Mindy and Patrick's PPF's. For
which of the following prices would both people gain from
trade?
Mindy
Patrick
* wallets
10
*wallets
10
8
7
6
4
4
3
3
2+
1+
1 2 3
4
6.
8
10 purses
1 2
3
6
8
10 purses
wallets per purse
O 2/3 wallets per purse
5/4 wallets per purse
None of the three choices
All of the three choices
Expert Solution
Step 1
Ques 1)
The correct option is :
The Equilibrium price would increase but effect on quantity is ambiguous.
This is because destruction of land due to wildfire decreases the supply of strawberries.
The increase in price of blueberries would increase the
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