e d. lightbulbs QUESTION 17 What would happen to the equilibrium price and quant

Question

e d. lightbulbs QUESTION 17 What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly you? fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for o a Quantity will fall, and the effect on price is ambiguous b. Quantity will rise, and the effect on price is ambiguous C.Price will rise, and the effect on quantity is ambiguous. d. Price will fall, and the effect on quantity is ambiguous. QUESTION 18 Figure 6-9

Explanation / Answer

Ans) C is the correct option. Price will rise, and the effect on quantity is ambiguous.

Supply decreases because of the increase price of peanuts which increases the cost of producing peanut butter and less output is available, as fewer firms produce it. Because of the announcement the demand for peanut butter increase. Since jelly is a complement good for peanut butter and its price is fell which is also the reason for increase in demand. So the equilibrium price rises whereas change in equilibrium quantity is unknown.

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