All Cereal Producers Have Decided to Add a New Ingredient

question 72

Multiple Choice

All cereal producers have decided to add a new ingredient, the "crunch enhancer," to cereals.Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like cereal more than before.What happens to the supply and demand curves for cereal now that it costs more to produce and consumers like it better?

• A)The supply curve shifts rightward and the demand curve remains unchanged.
• B)The supply curve shifts leftward and the demand curve remains unchanged.
• C)The supply and demand curves both shift rightward.
• D)The supply curve shifts leftward and the demand curve shifts rightward.
• E)Neither curve changes but a movement occurs up along the demand curve and a movement occurs up along the supply curve.

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