What Would Happen to the Equilibrium Price and Quantity of Lattés

question 84

Multiple Choice

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk,which is used to make lattés,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:

Profits

The financial gain obtained when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Heterogeneity

The quality or state of being diverse in character or content; variety within a group or structure.

Status Construction

The process through which social hierarchies and positions are created and maintained within societies.