All Grapefruit Juice Producers Have Decided to Blend Tangerine Juice

question 9

Multiple Choice

All grapefruit juice producers have decided to blend tangerine juice with grapefruit juice.This blend results in a higher cost of production, but studies show that consumers prefer the taste of the blend to straight grapefruit juice.What will happen to the equilibrium price and quantity of grapefruit juice?

• A)The equilibrium quantity increases but the effect on the equilibrium price is uncertain.
• B)The equilibrium price falls and the equilibrium quantity increases.
• C)The equilibrium price rises but the effect on the equilibrium quantity is uncertain.
• D)The equilibrium price rises and the equilibrium quantity increases.
• E)The equilibrium price rises and the equilibrium quantity remains unchanged.