Suppose the Market for "Soda X" Is in Equilibrium

question 30

Multiple Choice

Suppose the market for "soda X" is in equilibrium. If the FDA announced today that this soda has been proven to cause a fatal disease, what would be most likely to happen to the equilibrium price and equilibrium quantity of soda X?

• A) Price increases and quantity increases
• B) Price decreases and quantity increases.
• C) Price increases and quantity increases.
• D) Price decreases and quantity decreases
• E) No change in price and quantity

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Definitions:

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Imitation Stage

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