If the Cost to Produce Frozen Chicken Nuggets Decreases at the Same

question 52

Multiple Choice

If the cost to produce frozen chicken nuggets decreases at the same time as consumer tastes shift away from frozen chicken nuggets and the shift in supply is greater than the shift in demand, which of the following is true?

• A)Both the equilibrium quantity and price will decrease.
• B)Both the equilibrium quantity and price will increase.
• C)The equilibrium price will decrease and the equilibrium quantity will not change.
• D)The equilibrium price will decrease and the equilibrium quantity will increase.

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Definitions:

OPEC

The Organization of the Petroleum Exporting Countries, a group consisting of 13 of the world's major oil-exporting nations.

Perfectly Competitive Market

A market in which all participants are price-takers.

Tacit Collusion

An unspoken, illegal agreement among competitors to avoid competing directly, often leading to higher prices.

Explicit Collusion

An overt agreement among firms within an industry to fix prices, limit production, or engage in other anticompetitive practices.