0 The cost of producing cigaretes in u.s. has increased and at the move andl mor

Question

0 The cost of producing cigaretes in u.s. has increased and at the move andl more Americans are choosina fo not Smoke Ciaare hes lohich of tollowna best explns-the effect of hes the cigare He marKet? A.) Both the supply and demnd aur have shifted to the riant. As a result) ttue es has been an mcrtase is the eaili bnum anhty and an unartain effect on the ilibium pice By Tue Zupply Curve has shifted to ight and sthe demand cune has shiftedl to the left As a resut here has bæn an increase in the equilibrum uan dit ano unertain effect on the equsi libhum Orce C.) Botn the suppy demane aures shi-fHed the left There has been a deerease in lailhtn n apl d ibnum quanthy an uncentuin efect on the ere DThe Supply' aurve has snifted to the right d the demand cune has shiflecl to left. There has been an in crease in the equili brium pncet an uncertain efecti on

Explanation / Answer

c is the answer

Increase in cost of production leads to decrease in supply and hence supply curve shifts to left.

Whereas this awareness leads to decrease in demand and hence demand curve also shifts to left.

Due to this equilibrium quantity definitely decreases but the effect on price depends on how much supply and demand has changed. Price is unchanged if demand and supply shifts by same amount. But if demand falls more than fall in supply, price will decrease.

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