What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine thatreduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientistsdiscovered that lattés reduce heart attacks.A) Both the equilibrium price and quantity would increase.B) Both the equilibrium price and quantity would decrease.C) The equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous.D) The equilibrium quantity would increase, and the effect on equilibrium price would be ambiguous.E) The equilibrium quantity would decrease, and the effect on equilibrium price would be ambiguous.

The situation outlined affects the latté market in two ways: it lowers production costs and raises…

Answered: What would happen to the equilibrium…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Once again, consider the market for avocados. Approximately 32 percent of the world's total production of avocados come from Southern California. Suppose that devastating wildfires destroy large swaths of California's avocado crop. Which of the following statements describes the effect the wildfires will have on the price and quantity (i.e., equilibrium price and equilibrium quantity) of avocados? The price will increase and the quantity will decrease. The price will decrease and the quantity will increase. Both the price and the quantity will decrease. Both the price and the quantity will increase
For each of the following changes in the demand or supply curves in the automobile market below, draw a graph showing the old demand and supply curves as well as the new demand or supply curve (whichever shifts). Also, show how the equilibrium price and equilibrium quantity change. Show work on 3 different graphs. The income of consumers rises and automobiles are considered a normal good. Over time, and due to new resource discoveries, gasoline prices fall. The availability and price of public transportation falls.
Describe and explain how both the equilibrium price and quantity will change when: a) Only supply decreasesb) Only supply increasesc) Only demand increasesd) Only demand decreases
You are studying the market for a particular brand of perfume. You notice that a couple of changes are happening in the market at the same time. The flower that creates the perfume scent has been affected by a disease. In addition, consumers begin to worry about the safety of the ingredients that are used in the perfume. What do you expect will happen to the equilibrium price and the equilibrium quantity? Explain your answer, include the necessary graphs.
Ethanol, a fuel, is made from corn. Ethanol production increased 8.5 times from 2000 to 2015 (www.ethanolrfa.org). Show the effect of this increased use of corn for producing ethanol on the price of corn and the consumption of corn as food using a supply-and-demand diagram.
How will a simultaneous increase in the price of a substitute good and an improvement in production technology affect market demand and/or supply, equilibrium price and equilibrium quantity in a competitive market?
In Country A, it is popular for the citizen to have a glass of orange juice together with a piece of cupcake at the tea time. Recently, the citizens found that the price of orange juice increases dramatically. What are the effects on the equilibrium price and equilibrium quantity in the market of cupcake? No diagram is needed but you need to describe how the curve(s) shifts in your written explanation.
The island nation of Coconutistan recently suffered an unfortunate accident which took its water treatment plant offline, leaving residents without clean water in their homes. The plant for bottling water was unaffected by the accident. The graph shows the supply and demand for bottled water before the accident. Assume that $6 is the maximum price for a case of bottled water according to the price gouging laws on the island. Shift one or more curves to show the effect of the accident on the market for bottled water. Price ($)Quantity of bottled water by the case01002003004005006007008009001,000012345678910SupplyDemandPrice ceiling What is the amount of the shortage after the accident? shortage:
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What are the effects on the equilibrium price and quantity of chocolate if information becomes available that eating chocolate makes your hair fall out and at the same time the price of sugar that is needed to make chocolate reduces by 10 percent? Clearly state the effect on demand and supply and whether equilibrium price and/or quantity have increased, decreased or whether the outcome is uncertain.
What is the relationship between quantity demanded and quantity supplied at equilibrium? What is the relationship when there is a shortage? What is the relationship when there is a surplus?
Number 3

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