Question

A new restaurant has introduced a wildly popular macaroni and cheese dish made with goat cheese. however, at approximately the same time, an outbreak of disease has decreased the local goat population (without impacting the safety of goat cheese). how do the price and quantity of goat cheese change?

Answer 1

How do the price and quantity of goat cheese change? The price of goat cheese will likely rise because there is less being produced and able to be consumed. The quantity of goat cheese is not able to be determined by the information provided in the question.

Answer 2

Answer: Price increases and the effect on quantity cannot be determined.

Explanation: An outbreak of a disease leads to a decline in Goat population, as a result of this the supply of Goat Cheese also declines at given price level. The fall in supply will shift the supply curve up to the left,. A leftward shift in the supply curve will thus lead to a rise in the price of Goat cheese.

However, the effect of this change on quantity cannot be determined as we have no information on the changes in demand for goat cheese.

Thus, price of goat cheese will increase and change in quantity cannot be determined.