Question

apter 2 Quiz tml 5 Suppose that new medical research strongly indicates that the consumption of coffee can cause cancer of the colon What effect will this news have on the equilibrium price and quantity traded of the following products? a Coffee beans. The equilibrium price for coffee beans would Cick to select)and quantity traded would TCick to solecty b. Tea a substitute for coffee. The equilibrium price for tea would [Cka to selecgy and quantytraded would Csck to lct 157c. Danish pastries, a complement to coffee. The equilibrium price for danishes would (Cick to select)and quantity traded would d. Teapots, a complement to tea. The equilbrium price for teapots would to select) and quantity traded would Cick to select) go up not change

Answer 1

ANSWER:

A) Price decreases (go down) due to lower demand and quantity traded would decrease because suppliers would have no incentive to produce it.

B) Price increases (go up) due to increase in demand as tea is substitute for coffee and quantity traded would increase as suppliers would have more incentive to produce tea.

C) Price decreases as danish pastries are complements to coffee and when demand for coffee goes down , demand for danish pastries will also go down and quantity traded would also decrease with less demand for danish pastries.

D) Price for tea pots would increase as tea pots being compliments to tea , so as the demand for tea increases , the demand for teapots will increase and with the demand increasing the price will increase (go up) and with it the quantity traded will also increase.