Question

Sabrina decided to start selling lemonade on her street. The other kids in the neighborhood noticed that Sabrina was making a lot of money selling lemonade. These kids decided to open their own lemonade stand. When they opened their own lemonade stand, the equilibrium price ________ and the equilibrium quantity ________. Group of answer choices a. decreased; decreased b. stayed the same; stayed the same c. increased; decreased d. increased; increased e. decreased; increased

Answer 1

Answer:

e. Decreased; Increased

Explanation:

The market equilibrium refers to the condition in which the price and the quantity are in equilibrium if the conditions of supply (what the producers offer) and demand (what the consumers buy) don't change.

In this case we have that as the other kids decide to sell more lemonade the amount of lemonade is going to increase (equilibrium quantity) and because of this the price is going to decrease (equilibrium price).

Then when the other kids open theirown lemonade stand, the equilibrium price descreased and the equilibrium quantity increased.