Related to the Economics in Practice on Page 318: a Company

question 103

Multiple Choice

Related to the Economics in Practice on page 318: A company selling iced tea discovers that as sugar is added to tea, customers' opinions of the taste of the tea rises for the first few grams of sugar and then drops. Even so, the company chooses not to add the amount sugar that would result in the best-tasting tea. Which of the following would explain why adding less sugar could be a wise decision?

• A) The price of sugar added to tea is much less significant than the price of other ingredients, such as tea leaves.
• B) Manufacturers of tea are required to clearly indicate the amount of sugar in their products.
• C) Teas with less sugar are more likely to appeal to health-conscious consumers.
• D) Many products in the cold drink market are sold with substitutes for sugar, such as high fructose corn syrup.

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Definitions:

Equilibrium Price

The price at which the quantity demanded of a good equals the quantity supplied.

Quantity Demanded

Represents the total amount of a good or service that consumers are willing and able to purchase at a given price over a specific period of time.

Shortage Occurs

A market condition where the demand for a product exceeds its supply at a given price, leading to a situation where not all consumer demand can be met.

Motorcycle Producers

Companies or entities that manufacture motorcycles, focusing on aspects such as design, production, and marketing.