An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease. an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease.

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Business

Alvin Dickerson

16 May, 17:31

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in an increase in the equilibrium price of peanuts and no change in the equilibrium quantity. an increase in the equilibrium quantity of peanuts and no change in the equilibrium price. an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease. an increase in the equilibrium price of peanuts; the equilibrium quantity may increase or decrease.

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Answers (1)

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Hamilton · Answer 1

The correct answer is option c.

Explanation:

When there is an increase in demand because of change in taste, the demand curve will move to right.

Along with demand, supply also increases because of favorable growing conditions. The supply curve will move to the right as well.

This will lead to an increase in the equilibrium quantity though the equilibrium price may increase, decrease or remain the same.

If the demand increases with the same proportion as supply then price will remain the same and quantity will increase.

If the increase in demand is greater than supply, then in that case, price will increase as will quantity.

Now, if the increase in supply is greater than demand then in that case price will fall and the quantity will increase.