Suppose the Market for "Soda X" Is in Equilibrium

question 109

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 decreases
• B) Price decreases and quantity increases
• C) Price increases and quantity increases
• D) Price decreases and quantity decreases

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Definitions:

Behavioural Rehearsal

A therapeutic technique involving the practice of desired behaviors in a safe setting to improve real-world application, often used in social skills training.

Aversion Therapy

A type of behavioral therapy that involves pairing unwanted behaviors with unpleasant stimuli to reduce the occurrence of those behaviors.

Problem Drinker

An individual who experiences social, emotional, or physical problems as a result of alcohol consumption.

Drug Therapy

The treatment of diseases and conditions with pharmaceutical drugs, as opposed to surgery or other interventions.