Question

A wall street journal headline reads: "cigar shortage draws new brands into market." the shortage resulted from a renewed interest in smoking cigars. what best describes facts behind the headline? supply has shifted to the right. price has fallen somewhat, but not enough to equilibrate supply and demand. demand has shifted to the right. price has risen somewhat, increasing quantity supplied, but not enough to equal quantity demanded. demand has shifted to the right and price has risen to equilibrate supply and demand. supply has shifted to the left. price has risen somewhat, but not enough to equilibrate supply and demand.

Answer 1

Options unclear. Here's the full options to the question;

a) Supply has shifted to the right. Price has fallen somewhat, but not enough to equilibrate supply and demand.

b) Demand has shifted to the right. Price has risen somewhat, increasing quantity supply,

c) Supply has shifted to the left. Price has risen somewhat, but not enough to equilibrate supply and demand.

d) Demand has shifted to the right and price has risen to equilibrate supply and demand.

Answer:

d)

Explanation:

Remember, it was mentioned that the shortage resulted from a renewed interest in smoking cigars. This interest signify the demand for cigars, which thus led to new brands into market because price has risen to equilibrate supply and demand.

In conclusion, the increase in the demand, triggered the price increase for cigars and became a market of potentials to companies.

Answer 2

Answer:

Demand has shifted to the right and price has risen to equilibrate supply and demand.

Explanation:

Due to the shortage of cigar caused by the renewed in smoking cigars, it is observed that the quantity supplied does not equal or satisfy the quantity demanded. This has shifted the demand for cigars to the right.

Also, because there is still a shortage of cigars in the market, the price is not at equilibrium with the demand and there is no proof of a possible decline in supply.

Because of the opportunity in this market, new brands are drawn. More companies will want to come in to service the teeming cigar smokers. Their involvement will balance demand and supply over time.