Question

Consider the market for coffee makers. If coffee becomes cheaper, consumption of coffee is found to reduce heart disease, the wages of workers in manufacturing plants increases, and the price of plastic increases, the equilibrium price will A fall. B stay the same. C rise. D could rise, fall, or remain unchanged.

Answer 1

Answer:

C.rise

Explanation:

Answer 2

Answer:

Option (c) is correct.

Explanation:

There is a market of coffee makers:

If consumption of coffee is found to reduce the heart diseases then more number of people wants to buy coffee and hence, the demand for coffee increases. This will shift the demand curve for coffee rightwards.

If there is an increase in the wages of the workers then as a result this will increase the cost of production of coffee makers and hence, there is a reduction in the supply of coffee. This will shift the supply curve leftwards.

As a result, there is a rise in the equilibrium price and the effect on equilibrium quantity is indeterminate.