The surgeon general announces that wearing a hat significantly reduces your chance of getting skin cancer. Also, hats look cool
(provided you choose the right kind) and you want to look cool, right?
As a result, many more people buy and wear hats. What happens in the market for hats?
A. Demand shifts to the right, price rises, quantity rises.
B. Demand shifts to the right, price falls, quantity falls.
C. Supply shifts to the right, price falls, quantity falls.
D. Supply shifts to the left, price rises, quantity falls.
E. The higher price of hats causes quantity demanded to fall.
As a result, many more people buy and wear hats. What happens in the market for hats?
A. Demand shifts to the right, price rises, quantity rises.
B. Demand shifts to the right, price falls, quantity falls.
C. Supply shifts to the right, price falls, quantity falls.
D. Supply shifts to the left, price rises, quantity falls.
E. The higher price of hats causes quantity demanded to fall.
1 answer:
Answer:
A. Demand shifts to the right, price rises, quantity rises.
Explanation:
In economics demand shifts as a result of other factors except for price.
In this instance the statement by the surgeon general on how hats reduce skin cancer will result in a demand shift to the right.
The effect of this is the demand for hats will increase, the prices will also increase. This is illustrated in the attached diagram.
Demand shifts from D1 to D2, price increases from P1 to P2, and quantity increases from Q1 to Q2
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