What Would Happen to the Equilibrium Price and Quantity of Lattés

question 58

Multiple Choice

What would happen to the equilibrium price and quantity of lattés if the cost to produce steamed milk,which is used to make lattés,increased,and scientists discovered that lattés cause heart attacks?

• A)Both the equilibrium price and quantity would increase.
• B)Both the equilibrium price and quantity would decrease.
• C)The equilibrium price would decrease,and the effect on equilibrium quantity would be ambiguous.
• D)The equilibrium quantity would decrease,and the effect on equilibrium price would be ambiguous.

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Definitions:

Compounded Semi-Annually

An approach to calculating interest where the interest is added to the principal twice a year.

Loan

The lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc.

Amount

The total sum or quantity of something.

Compounded Monthly

Calculating interest on both the initial principal and the accumulated interest from previous periods, done on a monthly basis.