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?
a. Price and quantity increase
b. Price increases and the effect on quantity cannot be determined
c. Quantity increases and the effect on price cannot be determined
d. Quantity decreases and the effect on price cannot be determined

Answer 1

Answer:

Price increases and the effect on quantity cannot be determined.

Explanation:

Demand

This is simply defined as the combining of desire, ability, and willingness to buy a product. The quantity demandedbof a commodity is the amount demanded at any given price.

Supply

This is simply defined as the amount of product rendered for sale at all different prices in a market. The quantity supplied is commonly refered to as the amount that producers bring to the market at at any given price.

Demand increased due to the new dish, while supply has decreased due to the goat disease. Price will therefore increase, but the effect on quantity depends on the magnitude of the impact of these two events.