What Would We Expect to Happen to the Price and Quantity

question 34

Multiple Choice

What would we expect to happen to the price and quantity of Pepsi if the price of Coke increases and Pepsi develops a new technology that makes its production process more efficient?

• A) The equilibrium price will go up and the equilibrium quantity will go up.
• B) The equilibrium price will be indeterminate and the equilibrium quantity will go up.
• C) The equilibrium price will go down and the equilibrium quantity will be indeterminate.
• D) The equilibrium price will be indeterminate and the equilibrium quantity will go down.
• E) The equilibrium price will go up and the equilibrium quantity will be indeterminate.

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Definitions:

Market Prices

The current value at which goods or services can be bought or sold in an open market.

Market Prices

The current price at which an asset or service can be bought or sold, determined by supply and demand in an open market.

Entrepreneurs

Individuals who start, manage, and assume the risks of a business or enterprise, often introducing innovations or exploring new market opportunities.

Costs of Production

The total expenses incurred in manufacturing a product or providing a service, including raw materials, labor, and overheads.