If Consumers Often Purchase Muffins to Eat While They Drink

question 127

Multiple Choice

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops,what would happen to the equilibrium price and quantity of lattés if the price of muffins rises?

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

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Definitions:

Indirect Cost

Expenses not directly linked to the production of goods or services, such as administrative and marketing costs.

Bankruptcy

A legal proceeding for liquidating or reorganizing a business. Also, the transfer of some or all of a firm’s assets to its creditors.

Debt Restrictions

Clauses or covenants in a loan agreement that limit or restrict the borrower's actions to protect the lender’s interests.