Question

what happens to the equilibrium price and equilibrium quantity in the market for twinkies when the price of sugar increases? question 34 options: equilibrium price increases and equilibrium quantity increases equilibrium price decreases and equilibrium quantity decreases equilibrium price decreases and equilibrium quantity increases equilibrium price increases and equilibrium quantity decreases

Answer 1

When demand is constant, there is an inverse relationship between supply and prices of products and services. Prices tend to decrease to a lower equilibrium price and a greater equilibrium quantity of goods and services if supply of goods and services increases while demand stays the same.

What is Equilibrium Price?

The price at which supply and demand for a good or service are equal is known as the equilibrium price. When a market is in equilibrium, both consumers and producers are satisfied, which maintains a stable price for the good or service.

At EQ, neither a deficit nor a surplus exist unless a demand or supply determinant changes. When the price of a good or service changes and there is a shortage, this indicates that buyers want to purchase more than what producers are willing to sell. Demand exceeds the supply in this situation, leaving customers unsatisfied. The opposite is true if a price shift results in a surplus, which indicates that customers wish to purchase fewer units than are being provided by producers. When supply surpasses demand, companies must reduce the cost of the good or service in order to prevent building up too much stock.

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