Question 14 The Market: Potato chips. The Event: A fungal disease affecting pota

Question

Question 14

The Market: Potato chips.
The Event: A fungal disease affecting potatoes breaks out in Idaho, ravaging the season’s potato crop. Simultaneously, new research shows potato chips to be one of the healthiest foods you can eat.

Given the above analysis of the potato chip market, we can most reasonably expect that:
I. equilibrium quantity will fall.
II. equilibrium quantity will rise.
III. equilibrium quantity is indeterminate.

IV. equilibrium price will fall.
V. equilibrium price will rise.
VI. equilibrium price is indeterminate.

Question 15

Microeconomics:

Explanation / Answer

Q14. Answer is a. III and V Explanation: As the supply cuve shift to the left annd demand curve shift to the right, it will make the equilibrium price to rise. However, the quantum of change in equilibrium quantity depends upon the quantum of effect on demand and supply which is not given in the problem. Q15. Answer is b. is concerned with individual economic units and specific markets.

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