Question

Peanuts are an input in the production of peanut butter. If a decrease in the supply of peanuts increases the price of peanuts, what will happen to the equilibrium price and quantity in the peanut butter market?

Answer 1

Answer:

Equilibrium price would rise

Equilibrium quantity would fall

Explanation:

If the supply of peanuts falls, it would lead to a rise in the price of peanuts because the demand for peanuts woild exceed its supply.

The rise in price would increase the cost of production of peanut butter because peanut is an input in the production of peanut butter. This rise in cost would discourage suppliers and supply of peanut butter would fall. As a result equilibrium quantity would fall. As a result of a fall in supply of peanut butter, demand would exceed supply and equilibrium price would rise.

I hope my answer helps you

Answer 2

Answer:

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Explanation: